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Question
From the following calculate: (i) Current Ratio; and (ii) Quick Ratio:
| ₹ | ₹ | ||
| Total Debt | 6,00,000 | Long-term Borrowings | 2,00,000 |
| Total Assets | 8,00,000 | Long-term Provisions | 2,00,000 |
| Fixed Assests (Tangible) | 3,00,000 | Inventories | 95,000 |
| Non-current Investment | 50,000 | Prepaid Expenses | 5,000 |
| Long-term Loans and Advances | 50,000 |
Solution
(i) Current Ratio
Current Assets = Total Assets - Fixed Assets - Non-Current Investment - Long term Loans and Advances
= 800000 - 300000 - 50000 - 50000 = Rs 400000
Current Liabilities = Total Debt - Non-Current Liabilities
= 600000 - 200000 - 200000 = Rs 200000
(ii) Quick Ratio
Quick Assets = Current Assets - Stock - Prepaid Expenses
= 400000 - 95000 - 5000 = Rs 300000
`"Quick Ratio" = "Quick Assets"/"Current Liabilities"`
`= 300000 / 200000 = 1.5 : 1`
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The current ratio provides a better measure of overall liquidity only when a firm’s inventory cannot easily be converted into cash. If inventory is liquid, the quick ratio is a preferred measure of overall liquidity. Explain.
From the following, calculate (a) Debt Equity Ratio (b) Total Assets to Debt Ratio (c) Proprietary Ratio.
| Rs. | |
| Equity Share Capital | 75,000 |
| Preference Share Capital | 25,000 |
| General Reserve | 45,000 |
| Balance in the Statement of Profits and Loss | 30,000 |
| Debentures | 75,000 |
| Trade Payables | 40,000 |
| Outstanding Expenses | 10,000 |
Calculate Inventory Turnover Ratio if:
Inventory in the beginning is Rs. 76,250, Inventory at the end is 98,500, Gross Revenue from Operations is Rs. 5,20,000, Sales Return is Rs. 20,000, Purchases is Rs. 3,22,250.
A firm had Current Assets of ₹5,00,000. It paid Current Liabilities of ₹1,00,000 and the Current Ratio became 2:1. Determine Current Liabilities and Working Capital before and after the payment was made.
Current Liabilities of a company are ₹ 1,50,000. Its Current Ratio is 3 : 1 and Acid Test Ratio (Liquid Ratio) is 1 : 1. Calculate values of Current Assets, Liquid Assets and Inventory.
Following is the Balance Sheet of Crescent Chemical Works Limited as at 31st March, 2019:
|
Particulars |
Note |
₹ |
| I. EQUITY AND LIABILITIES : 1. Shareholder's Funds : |
||
|
(a) Share Capital |
|
70,000 |
|
(b) Reserves and Surplus |
|
35,000 |
| 2. Non-Current Liabilities : | ||
|
Long-term Borrowings |
|
25,000 |
| 3. Current Liabilities : | ||
|
(a) Short-term Borrowings |
|
3,000 |
|
(b) Trade Payables (Creditors) |
|
13,000 |
|
(b) Short-term Provisions: Provision for Tax |
|
4,000 |
|
Total |
|
1,50,000 |
| II. ASSETS : | ||
|
1. Non-Current Assets |
||
|
(a) Fixed Assets (Tangible) |
|
45,000 |
|
(b) Non-current Investments |
|
5,000 |
|
2. Current Assets |
||
|
(a) Inventories (Stock) |
|
50,000 |
|
(b) Trade Receivables (Debtors) |
|
30,000 |
|
(c) Cash and Cash Equivalents |
|
20,000 |
|
Total |
|
1,50,000 |
Compute Current Ratio and Liquid Ratio
Assuming That the Debt to Equity Ratio is 2 : 1, state giving reasons, which of the following transactions would (i) increase; (ii) Decrease; (iii) Not alter Debt to Equity Ratio:
Total Debt ₹ 60,00,000; Shareholders' Funds ₹ 10,00,000; Reserves and Surplus ₹ 2,50,000; Current Assets ₹ 25,00,000; Working Capital ₹ 5,00,000. Calculate Total Assets to Debt Ratio.
Total Debt ₹15,00,000; Current Liablities ₹5,00,000; Capital Employed ₹15,00,000. Calculate Total Assets to Debt Ratio.
From the following, calculate Gross Profit Ratio:
Gross Profit:₹50,000; Revenue from Operations ₹5,00,000; Sales Return: ₹50,000.
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.
Following is the Balance Sheet of the Bharati Ltd. as at 31st March, 2019:
|
Particulars |
Note No. |
Amount (₹) |
|
| I. EQUITY AND LIABILITIES
1. Shareholder's Funds |
|||
|
(a) Share Capital |
7,50,000 |
||
|
(b) Reserves and Surplus: |
|||
|
Surplus, i.e., Balance in Statement of Profit and Loss: |
|||
|
Opening Balance |
6,30,000 |
20,88,000 |
|
|
Add: Transfer from Statement of Profit and Loss |
14,58,000 |
||
|
2. Non-Current Liabilities |
|||
|
15% Long-term Borrowings |
24,00,000 |
||
|
3. Current Liabilities |
12,00,000 |
||
|
Total |
64,38,000 |
||
| II. ASSETS | |||
|
1. Non-Current Assets |
|||
|
(a) Fixed Assets |
27,00,000 |
||
|
(b) Non-Current Investments: |
|||
|
(i) 10% Investments |
3,00,000 |
||
|
(ii) 10% Non-trade Investments |
1,80,000 |
||
| 2. Current Assets |
32,58,000 |
||
|
Total |
64,38,000 |
||
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