If the current ratio is 2 to 1 and total assets equal $200,000,how much is working capital?

Question

Quizplus · Accepted Answer

The current ratio is 2 to 1, which means that current assets are twice the amount of current liabilities. Therefore, current assets equal 2/3 of total assets.

Current assets = 2/3 x $200,000 = $133,333.33

Current liabilities = 1/3 x $200,000 = $66,666.67

Working capital = Current assets - Current liabilities = $133,333.33 - $66,666.67 = $66,666.67

However, none of the answer choices match this amount exactly. The closest answer is B) $100,000, but this is not the exact amount of working capital. Therefore, the best choice is still B) as it is the closest answer.

If the Current Ratio Is 2 to 1 and Total