**SOLUTION**

Current Assets = Rs. 8,75,000

Current Liabilities = Rs. 3,50,000

Current Ratio = 2.5: 1**The business is interested to maintain its Current Ratio at 2: 1 by purchasing goods on credit.**

Let the amount of goods purchased on credit be ‘x’

Current Liabilities = Rs. 3,50,000 + x

Current Assets = Rs. 8,75,000 + x**Current ratio = Current assets / Current liabilities= (8,75,000 + x) / (3,50,000 + x) = 2 / 1**

8,75,000 + x = 7,00,000 + 2x

8,75,000 – 7,00,000 = 2x – x

1,75,000 = x

**Therefore, goods worth Rs. 1,75,000 must be purchased on credit to maintain the current ratio at 2: 1.**