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DK Goel Accountancy Class 12 Solutions Vol 2 Chapter 5 Accounting Ratios
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Question 1
From the following, compute the current ratio.
| ₹ | |
| Non-Current Investments | 1,00,000 |
| Current Investments | 40,000 |
| Inventories (including loose tools of ₹ 50,000/-) | 2,80,000 |
| Trade Receivables: | |
| Sundry Debtors | 1,60,000 |
| Bills Receivables | 20,000 |
| Trade Payables: | |
| Sundry Creditors | 1,20,000 |
| Bills Payables | 10,000 |
| Long-term Borrowings | 2,00,000 |
| Short-term Borrowings | 50,000 |
| Short-term Provision (Provision for Tax) | 20,000 |
| Cash and Bank Balance | 30,000 |
Solution:
Current Assets = Current Investments + Inventories (Excluding Loose Tools) + Trade Receivables (Sundry Debtors + Bills Receivables) + Cash and Bank Balance
= 40,000 + 2,30,000 + 1,60,000 + 20,000 + 30,000
= ₹. 4,80,000/-
Current Liabilities = Trade Payables (Sundry Creditors + Bills Payables) + Short term Borrowings + Short term Provision (Provision for Tax)
= 1,20,000 + 10,000 + 50,000 + 20,000
= ₹. 2,00,000/-
Current Ratio= {4,80,000}/{2,00,000} = 2:4:1
Question 2
Following particulars are given to you:
| ₹ | ||
| Trade Investmests | 2,50,000 | |
| Marketeable Secuities | 40,000 | |
| Tangible Fixed Assets | 6,00,000 | |
| Intangible Assets (Goodwill) | 1,00,000 | |
| Trade Receivables | 2,00,000 | 1,80,000 |
| Less: Provision for Doubtful Debts | 20,000 | |
| Cash and Bank Balance | 80,000 | |
| Trade Payables | 1,20,000 | |
| Rent Payables | 10,000 | |
| Dividend Payable | 30,000 | |
| Inventories | 3,90,000 | |
| Long term Borrowings (8% Debentures) | 2,80,000 | |
| Short term Borrowings (Bank Overdraft) | 25,000 | |
| Short term Provisions: | ||
| Provisions for Tax | 55,000 | |
| Income Tax paid in Advance | 30,000 |
Calculate the Liquidity Ratios.
Solution:
Liquidity Ratios include the following 2 ratios. Namely,
- Current ratio
- Quick ratio
Current Assets = Marketable Securities + Trade Receivables + Cash and Bank Balance + Inventories + Income Tax paid in advance
= 40,000 + 1,80,000 + 80,000 + 3,90,000 + 30,000
= ₹. 7,20,000/-
Current Liabilities = Trade Payables + Rent Payable + Dividend Payable + Bank Overdraft + Provisions for Tax
= 1,20,000 + 10,000 + 30,000 + 25,000 + 55,000
= ₹. 2,40,000/-
Ratio={7,20,000}/{2,40,000}
=3:1
Liquid Assets = Current Assets – Inventories – Income Tax Paid in Advance
= 7,20,000 – 3,90,000 – 30,000
= 3,00,000
Ratio = {3,00,000}/{2,40,000}
= 1.25:1
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