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Question
Following is the balance sheet of Lakshmi Ltd. as of 31st March 2019.
| Particulars | ₹ |
| I Equity and Liabilities | |
| 1. Shareholder's Funds | |
| Equity share capital | 4,00,000 |
| 2. Non- Current liabilities | |
| Long term borrowings | 2,00,000 |
| 3. Current Liabilities | |
| (a) Short - term borrowings | 50,000 |
| (b) Trade payable | 3,10,000 |
| (c) Other current liabilities Expenses Payable | 15,000 |
| (d) Short - term provisions | 25,000 |
| Total | 10,00,000 |
| II Assets | |
| 1. Non - Current assets | |
| (a) Fixed assets Tangible assets | 4,00,000 |
| 2. Current assets | |
| (a) Inventories | 1,60,000 |
| (b) Trade debtors | 3,20,000 |
| (c) Cash and cash equivalents | 80,000 |
| (d) Other current assets prepaid expenses | 40,000 |
| Total | 10,00,000 |
Calculate: (i) Current ratio (ii) Quick ratio
Solution
Current ratio = `"Current Assets"/"Current liabilities"`
Current Assets = Inventories + Trade Debtors + Cash & Cash equivalents + Prepaid Expenses
= 1,60,000 +3,20,000 + 80,000 + 40,000
= Rs. 6,00,000
Current Liabilities = Short term borrowings + Trade Payable + Expenses payable + Short term provisions.
= 50,000 + 3,10,000 + 15,000 + 25,000
= Rs. 4,00,000
Current ratio = `600000/400000`
Current ratio = 1.5:1
Quick ratio = `"Quick Assets"/"Current liabilities"`
Quick Assets = Current Assets - (Inventors + Prepaid expenses)
Quick Assets = 6,00,000 - (1,60,000 + 40,000)
= Rs. 4,00,000
Quick Ratio = `400000/400000`
Quick Ratio = 1:1
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| Balance Sheet (Extract) as on 31.03.2018 | |
| Particulars | Amount ₹ |
| I. EQUITY AND LIABILITIES | |
| 1. Shareholders Funds | |
| (a) Share capital | |
| Equity share capital | 4,00,000 |
| 5% Preference share capital | 1,00,000 |
| (b) Reserves and surplus | |
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| Surplus | 1,50,000 |
| 2. Non-current Liabilities | |
| Long-term borrowings (6% Debentures) | 3,00,000 |
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| provision for tax | 30,000 |
| Total | 13,50,000 |
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| Statement of Profit and Loss | ||
| Particulars | Note No. | Amount ₹ |
| I. Revenue from operations | 15,00,000 | |
| II. Other Income | 40,000 | |
| III. Total revenue (I+II) | 15,40,000 | |
| IV. Expenses: | ||
| Purchases of Stock-in-trade | 8,60,000 | |
| Changes in inventories | 40,000 | |
| Employee benefits expense (Salaries) | 1,60,000 | |
| Other expenses | 1 | 1,70,000 |
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| V. Profit before tax (III-IV) | 3,10,000 | |
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| Particulars | Amount ₹ |
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| Statement of Profit and Loss | |
| Particulars | ₹ |
| I. Revenue from operations | 24,00,000 |
| II. Other income: | |
| Income from investment | 70,000 |
| III. Total revenues (I+II) | 24,70,000 |
| IV. Expenses: | |
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| Changes in inventories | -80,000 |
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| Other expenses | 1,10,000 |
| Provision for tax | 30,000 |
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