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Question
XYZ Limited's Inventory is ₹3,00,000. Total Liquid Assts are ₹12,00,000 and Quick Ratio is 2:1. Work out Current Ratio.
Solution
`"Quick Ratio" = "Quick Assets"/"Current Liabilities" = 2/1`
Quick Assets = 12,00,000
`"Current Liabilities" = "Quick Assets"/2 = 1200000/2 = 600000`
Current Assets = Quick Assets + Stock
= 12,00,000 + 3,00,000 = 15,00,000
`"Current Ratio" = "Current Assets"/ "Current liability" = 1500000/600000 = 2.5 : 1`
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Long Answer Question
How would you study the solvency position of the firm?
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 |
Working Capital ₹ 1,80,000; Total Debts ₹ 3,90,000; Long-Term Debts ₹ 3,00,000.
Calculate Current Ratio.
State giving reasons, which of the following transactions would improve, reduce or not change the Current Ratio, if Current Ratio of a company is (i) 1:1; or (ii) 0.8:1:
(a) Cash paid to Trade Payables.
(b) Purchase of Stock-in-Trade on credit.
(c) Purchase of Stock-in-Trade for cash.
(d) Payment of Dividend payable.
(e) Bills Payable discharged.
(f) Bills Receivable endorsed to a Creditor.
(g) Bills Receivable endorsed to a Creditor dishonoured.
Current Assets ₹ 3,00,000; Inventories ₹ 60,000; Working Capital ₹ 2,52,000.
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If Profit before Interest and Tax is ₹5,00,000 and interest on Long-term Funds is ₹1,00,000, find Interest Coverage Ratio.
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Choose the appropriate alternative from the given options:
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Quick Ratio can be calculated as ______?
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Balance Sheet (Extract)
| Liabilities | 31-03-2019 (₹) |
31-03-2020 (₹) |
| 12% debentures | 2,00,000 | 1,60,000 |
Additional Information:
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Debentures were redeemed on 30th September, 2019.
How much amount (related to above information) will be shown in Financing Activity for Cash Flow Statement prepared on 31st March, 2020?
Pick the odd one out.
Amount from current assets is realised within ______.
Which of the following is a profitability ratio?
