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    Question

    ABC Ltd. has current assets of Rs.8 lakh and current

    liabilities of Rs.5 lakh. It wants to maintain a current ratio of 2:1. How much current liability should it reduce to meet the target, assuming current assets remain constant?
    A Rs.3 lakh Correct Answer Incorrect Answer
    B Rs.1 lakh Correct Answer Incorrect Answer
    C Rs.2 lakh Correct Answer Incorrect Answer
    D Rs.6 lakh Correct Answer Incorrect Answer
    E Rs. 1.5 lakh Correct Answer Incorrect Answer

    Solution

    Current ratio (CR) = Current assets/ current liabilities To maintain CR of 2:1 → CA = 2 × CL ⇒ 8 = 2x ⇒ CL = ₹4 lakh Present CL = ₹5 lakh ⇒ Reduction = ₹1 lakh

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