13 :- Ratio of Current Assets (Rs 8,75,000) to Current Liabilities (Rs 3,50,000) is 2.5 : 1. The firm wants to maintain Current Ratio of 2:1 by purchasing goods on credit. Compute amount of goods that should be purchased on credit.
Solution :-
Current Assets = Rs 8,75,000
Current Liabilities = Rs 3,50,000
The firm wants to maintain Current Ratio as 2 : 1 by purchasing goods on credit.
It would increase stock and creditors at the same time.
Let the amount of goods to be purchased (increase) be x
2 = 8,75,000 + x/3,50,000 + x
(3,50,000 + x) X 2 = 8,75,000 + x
7,00,000 + 2x = 8,75,000 + x
x = 8,75,000 – 7,00,000
x = Rs 1,75,000
Therefore, goods of Rs 1,75,000 is to be purchased to maintain the Current Ratio as 2 : 1.