Advertisements
Advertisements
प्रश्न
State giving reason, whether the Current Ratio will improve or decline or will have no effect in each of the following transactions if Current Ratio is 2:1:
(a) Cash paid to Trade Payables.
(b) Bills Payable discharged.
(c) Bills Receivable endorsed to a creditor.
(d) Payment of final Dividend already declared.
(e) Purchase of Stock-in-Trade on credit.
(f) Bills Receivable endorsed to a Creditor dishonoured.
(g) Purchases of Stock-in-Trade for cash.
(h) Sale of Fixed Assets (Book Value of ₹50,000) for ₹45,000.
(i) Sale of FIxed Assets (Book Value of ₹50,000) for ₹60,000.
उत्तर
Let’s assume Current Assets as Rs 2,00,000 and Current Liabilities as Rs 1,00,000
`"Current Ratio" = "Current Assets"/ "Current liability" = 200000/100000 = 2 : 1`
(a) Cash paid to Trade Payables (say Rs 50,000)
`"Current Ratio" = (200000 - 50000)/(100000 - 50000) = 3 : 1` (Improve)
(b) Bills Payable discharged (say Rs 50,000)
`"Current Ratio" = (200000 - 50000)/(100000 - 50000) = 3 : 1` (Improve)
(c) Bills Receivable endorsed to a creditor (say Rs 50,000)
`"Current Ratio" = (200000 - 50000)/(100000 - 50000) = 3 : 1` (Improve)
(d) Payment of final Dividend already declared (say Rs 50,000)
`"Current Ratio" = (200000 - 50000)/(100000 - 50000) = 3 : 1` (Improve)
(e) Purchase of Stock-in-Trade on credit (say Rs 50,000)
`"Current Ratio" = (200000 + 50000)/(100000 + 50000) = 1.67 : 1`(Decline)
(f) Bills Receivable endorsed to a Creditor dishonoured (say Rs 50,000)
`"Current Ratio" = (200000 + 50000)/(100000 + 50000) = 1.67 : 1`(Decline)
(g) Purchase of Stock-in-Trade for cash (say Rs 50,000)
Current Ratio = `(200000 + 50000 - 50000)/100000` = 2:1 (No effect)
(h) Sale of Fixed Assets (Book value of Rs 50,000) for Rs 45,000
Current Ratio = `(200000 + 45000)/100000 = 2.45 : 1` (Improve)
(i) Sale of Fixed Assets (Book value of Rs 50,000) for Rs 60,000
Current Ratio = `(200000 + 60000)/100000 = 2.6:1` (Improve)
APPEARS IN
संबंधित प्रश्न
Following is the Balance Sheet of Raj Oil Mills Limited as at March 31, 2017. Calculate Current Ratio.
| Particulars | (Rs) |
| I. Equity and Liabilities: | |
|
1. Shareholders’ funds |
|
|
a) Share capital |
7,90,000 |
|
b) Reserves and surplus |
35,000 |
|
2. Current Liabilities |
|
|
a) Trade Payables |
72,000 |
| Total | 8,97,000 |
| II. Assets | |
|
1. Non-current Assets |
|
|
a) Fixed assets |
|
|
Tangible assets |
7,53,000 |
|
2. Current Assets |
|
|
a) Inventories |
55,800 |
|
b) Trade Receivables |
28,800 |
|
c) Cash and cash equivalents |
59,400 |
| Total | 8,97,000 |
From the following Balance Sheet and other information, calculate following ratios: (i) Debt-Equity Ratio (ii) Working Capital Turnover Ratio (iii) Trade Receivables Turnover Ratio
Balance Sheet as at March 31, 2017
| Particulars | Note No. | Rs. |
| I. Equity and Liabilities: | ||
| 1. Shareholders’ funds | ||
| a) Share capital | 10,00,000 | |
| b) Reserves and surplus | 9,00,000 | |
| 2. Non-current Liabilities | ||
| Long-term borrowings | 12,00,000 | |
| 3. Current Liabilities | ||
| Trade payables | 5,00,000 | |
| Total | 36,00,000 | |
| II. Assets | ||
| 1. Non-current Assets | ||
| a) Fixed assets | ||
| Tangible assets | 18,00,000 | |
| 2. Current Assets | ||
| a) Inventories | 4,00,000 | |
| b) Trade Receivables | 9,00,000 | |
| c) Cash and cash equivalents | 5,00,000 | |
| Total | 36,00,000 |
Additional Information: Revenue from Operations Rs. 18,00,000
Working Capital is ₹ 9,00,000; Trade payables ₹ 90,000; and Other Current Liabilities are ₹ 2,10,000. Circulate Current Ratio.
Current Ratio 4; Liquid Ratio 2.5; Inventory ₹ 6,00,000. Calculate Current Liabilities, Current Assets and Liquid Assets.
Total Assets ₹ 2,60,000; Total Debts ₹ 1,80,000; Current Liabilities ₹ 20,000. Calculate Debt to Equity Ratio.
Debt to Equity Ratio of a company is 0.5:1. Which of the following suggestions would increase, decrease or not change it:
(i) Issue of Equity Shares:
(ii) Cash received from debtors:
(iii) Redemption of debentures;
(iv) Purchased goods on Credit?
From the following Balance Sheet of ABC Ltd. as at 31st March, 2019, Calculate Debt to Equity Ratio:
|
Particulars |
₹ |
|
| I. EQUITY AND LIABILITIES | ||
|
1. Shareholder's Funds |
||
|
(a) Share Capital: |
||
|
(i) Equity Share Capital |
5,00,000 |
|
|
(ii) 10% Preference Share Capital |
5,00,000 |
10,00,000 |
|
(b) Reserves and Surplus |
2,40,000 |
|
|
2. Non-Current Liabilities |
||
|
Long-term Borrowings (Debentures) |
2,50,000 |
|
|
3. Current Liabilities : |
||
|
(a) Trade Payables |
4,30,000 |
|
|
(b) Other Current Liabilities |
20,000 |
|
|
(c) Short-term Provisions: Provision for Tax |
3,00,000 |
|
|
Total |
22,40,000 |
|
| II. ASSETS | ||
|
1. Non-Current Assets |
||
|
Fixed Assets: |
||
|
(i) Tangible Assets |
6,40,000 |
|
|
(ii) Intangible Assets |
1,00,000 |
|
|
2. Current Assets |
||
|
(a) Inventories |
7,50,000 |
|
|
(b) Trade Receivables |
6,40,000 |
|
|
(c) Cash and Cash Equivalents |
1,10,000 |
|
|
Total |
22,40,000 |
|
If Profit before Interest and Tax is ₹5,00,000 and interest on Long-term Funds is ₹1,00,000, find Interest Coverage Ratio.
From the following information, calculate Interest Coverage Ratio: Profit after Tax ₹1,70,000; Tax ₹30,000; Interest on Long-term Funds ₹50,000.
From the following information, calculate value of Opening Inventory:
| Closing Inventory | = | ₹ 68,000 |
| Total Sales | = | ₹ 4,80,000 (including Cash Sales ₹ 1,20,000) |
| Total Purchases | = | ₹ 3,60,000 (including Credit Purchases ₹ 2,39,200) |
Goods are sold at a profit of 25% on cost.
Calculate Trade payables Turnover Ratio from the following information:
Opening Creditors ₹ 1,25,000; Opening Bills Payable ₹ 10,000; Closing Creditors ₹ 90,000; Closing bills Payable ₹ 5,000; Purchases ₹ 9,50,000; Cash Purchases ₹ 1,00,000; Purchases Return ₹ 45,000.
Calculate Trade Payables Turnover Ratio for the year 2018-19 in each of the alternative cases:
Case 1 : Closing Trade Payables ₹ 45,000; Net Purchases ₹ 3,60,000; Purchases Return ₹ 60,000; Cash Purchases ₹ 90,000.
Case 2 : Opening Trade Payables ₹ 15,000; Closing Trade Payables ₹ 45,000; Net Purchases ₹ 3,60,000.
Case 3 : Closing Trade Payables ₹ 45,000; Net Purchases ₹ 3,60,000.
Case 4 : Closing Trade Payables (including ₹ 25,000 due to a supplier of machinery) ₹ 55,000; Net Credit Purchases ₹ 3,60,000.
Calculate Gross Profit Ratio from the following data:
Cash Sales are 20% of Total Sales; Credit Sales are ₹5,00,000; Purchases are ₹4,00,000; Excess of Closing Inventory over Opening Inventory ₹25,000.
From the following information, calculate Inventory Turnover Ratio; Operating Ratio and Working Capital Turnover Ratio:
Opening Inventory ₹ 28,000; Closing Inventory ₹ 22,000; Purchases ₹ 46,000; Revenue from Operations, i.e., Net Sales ₹ 80,000; Return ₹10,000; Carriage Inwards ₹ 4,000; Office Expenses ₹ 4,000; Selling and Distribution Expenses ₹ 2,000; Working Capital ₹ 40,000.
Calculate following ratios on the basis of the following information:
(i) Gross Profit Ratio;
(ii) Current Ratio;
(iii) Acid Test Ratio; and
(iv) Inventory Turnover Ratio.
| ₹ | ₹ | |||
| Gross Profit | 50,000 | Revenue from Operations | 1,00,000 | |
| Inventory | 15,000 | Trade Receivables | 27,500 | |
| Cash and Cash Equivalents | 17,500 | Current Liabilities | 40,000 |
Which one of the following is correct?
- A ratio is an arithmetical relationship of one number to another number.
- Liquid ratio is also known as acid test ratio.
- Ideally accepted current ratio is 1: 1.
- Debt equity ratio is the relationship between outsider’s funds and shareholders’ funds.
Consider the following statements.
Statement 1 - "Profit and loss account shows the operating performance of an enterprise for a period of time".
Statement 2 - "The Profit and loss account describes the different business activities such as revenues and expenses".
Liquidity ratios includes which two types of ratios?
Debtors (Receivables) Turnover Ratio can be calculated as ______?
Current ratio of Vidur Pvt. Ltd. is 3 : 2. Accountant wants to maintain it at 2 : 1. Following options are available:
- He can repay bills payable
- He can purchase goods on credit
- He can take short-term loan
Choose the correct option:
