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A Limited provides for the following information : ₹ 86,000 20,000 18,000 Closing Stock Creditors Cash Bills Receivable Sales Fixed Assets Bank Overdraft 1,20,000 42,000 34,000 Calculate: (a) Current Ratio, (b) Quick Ratio, (c) Inventory Turnover Ratio, (d) Fixed Assets Turnover Ratio. [Ans. (a) 1.6: 1, (b) 0.767: 1, (c) 6 Times, (d) 5 Times.]?
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A Limited provides for the following information : ₹ 86,000 20,000 18,...
Solution:
(a) Current Ratio:
- Current Assets = Closing Stock + Bills Receivable + Cash
- Current Liabilities = Creditors + Bank Overdraft
- Current Ratio = Current Assets / Current Liabilities = (86,000 + 20,000 + 18,000) / (42,000 + 34,000) = 1.6: 1
(b) Quick Ratio:
- Quick Assets = Closing Stock + Bills Receivable
- Quick Liabilities = Creditors + Bank Overdraft
- Quick Ratio = Quick Assets / Quick Liabilities = (86,000 + 20,000) / (42,000 + 34,000) = 0.767: 1
(c) Inventory Turnover Ratio:
- This ratio measures how efficiently a company is managing its inventory.
- Inventory Turnover Ratio = Cost of Goods Sold / Average Inventory
- Cost of Goods Sold = Sales - Gross Profit = Sales - (Sales - Cost of Goods Sold) = Cost of Goods Sold
- Average Inventory = (Opening Stock + Closing Stock) / 2
- Inventory Turnover Ratio = Cost of Goods Sold / Average Inventory = (Sales - Gross Profit) / [(Opening Stock + Closing Stock) / 2]
- Inventory Turnover Ratio = Sales / [(Opening Stock + Closing Stock) / 2] = 2 * Sales / (Opening Stock + Closing Stock) = 2 * 1,20,000 / 86,000 = 6 Times
(d) Fixed Assets Turnover Ratio:
- This ratio measures how efficiently a company is using its fixed assets to generate revenue.
- Fixed Assets Turnover Ratio = Sales / Fixed Assets = 1,20,000 / 1,20,000 = 5 Times
Conclusion:
- The Current Ratio of the company is 1.6: 1, indicating that the company has sufficient current assets to meet its current liabilities.
- The Quick Ratio of the company is 0.767: 1, indicating that the company may face some difficulty in meeting its current liabilities if it has to liquidate its inventory.
- The Inventory Turnover Ratio of the company is 6 Times, indicating that the company is managing its inventory efficiently.
- The Fixed Assets Turnover Ratio of the company is 5 Times, indicating that the company is using its fixed assets efficiently to generate revenue.
(a) Current Ratio:
- Current Assets = Closing Stock + Bills Receivable + Cash
- Current Liabilities = Creditors + Bank Overdraft
- Current Ratio = Current Assets / Current Liabilities = (86,000 + 20,000 + 18,000) / (42,000 + 34,000) = 1.6: 1
(b) Quick Ratio:
- Quick Assets = Closing Stock + Bills Receivable
- Quick Liabilities = Creditors + Bank Overdraft
- Quick Ratio = Quick Assets / Quick Liabilities = (86,000 + 20,000) / (42,000 + 34,000) = 0.767: 1
(c) Inventory Turnover Ratio:
- This ratio measures how efficiently a company is managing its inventory.
- Inventory Turnover Ratio = Cost of Goods Sold / Average Inventory
- Cost of Goods Sold = Sales - Gross Profit = Sales - (Sales - Cost of Goods Sold) = Cost of Goods Sold
- Average Inventory = (Opening Stock + Closing Stock) / 2
- Inventory Turnover Ratio = Cost of Goods Sold / Average Inventory = (Sales - Gross Profit) / [(Opening Stock + Closing Stock) / 2]
- Inventory Turnover Ratio = Sales / [(Opening Stock + Closing Stock) / 2] = 2 * Sales / (Opening Stock + Closing Stock) = 2 * 1,20,000 / 86,000 = 6 Times
(d) Fixed Assets Turnover Ratio:
- This ratio measures how efficiently a company is using its fixed assets to generate revenue.
- Fixed Assets Turnover Ratio = Sales / Fixed Assets = 1,20,000 / 1,20,000 = 5 Times
Conclusion:
- The Current Ratio of the company is 1.6: 1, indicating that the company has sufficient current assets to meet its current liabilities.
- The Quick Ratio of the company is 0.767: 1, indicating that the company may face some difficulty in meeting its current liabilities if it has to liquidate its inventory.
- The Inventory Turnover Ratio of the company is 6 Times, indicating that the company is managing its inventory efficiently.
- The Fixed Assets Turnover Ratio of the company is 5 Times, indicating that the company is using its fixed assets efficiently to generate revenue.
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A Limited provides for the following information : ₹ 86,000 20,000 18,000 Closing Stock Creditors Cash Bills Receivable Sales Fixed Assets Bank Overdraft 1,20,000 42,000 34,000 Calculate: (a) Current Ratio, (b) Quick Ratio, (c) Inventory Turnover Ratio, (d) Fixed Assets Turnover Ratio. [Ans. (a) 1.6: 1, (b) 0.767: 1, (c) 6 Times, (d) 5 Times.]?
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A Limited provides for the following information : ₹ 86,000 20,000 18,000 Closing Stock Creditors Cash Bills Receivable Sales Fixed Assets Bank Overdraft 1,20,000 42,000 34,000 Calculate: (a) Current Ratio, (b) Quick Ratio, (c) Inventory Turnover Ratio, (d) Fixed Assets Turnover Ratio. [Ans. (a) 1.6: 1, (b) 0.767: 1, (c) 6 Times, (d) 5 Times.]? for Class 12 2024 is part of Class 12 preparation. The Question and answers have been prepared according to the Class 12 exam syllabus. Information about A Limited provides for the following information : ₹ 86,000 20,000 18,000 Closing Stock Creditors Cash Bills Receivable Sales Fixed Assets Bank Overdraft 1,20,000 42,000 34,000 Calculate: (a) Current Ratio, (b) Quick Ratio, (c) Inventory Turnover Ratio, (d) Fixed Assets Turnover Ratio. [Ans. (a) 1.6: 1, (b) 0.767: 1, (c) 6 Times, (d) 5 Times.]? covers all topics & solutions for Class 12 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for A Limited provides for the following information : ₹ 86,000 20,000 18,000 Closing Stock Creditors Cash Bills Receivable Sales Fixed Assets Bank Overdraft 1,20,000 42,000 34,000 Calculate: (a) Current Ratio, (b) Quick Ratio, (c) Inventory Turnover Ratio, (d) Fixed Assets Turnover Ratio. [Ans. (a) 1.6: 1, (b) 0.767: 1, (c) 6 Times, (d) 5 Times.]?.
A Limited provides for the following information : ₹ 86,000 20,000 18,000 Closing Stock Creditors Cash Bills Receivable Sales Fixed Assets Bank Overdraft 1,20,000 42,000 34,000 Calculate: (a) Current Ratio, (b) Quick Ratio, (c) Inventory Turnover Ratio, (d) Fixed Assets Turnover Ratio. [Ans. (a) 1.6: 1, (b) 0.767: 1, (c) 6 Times, (d) 5 Times.]? for Class 12 2024 is part of Class 12 preparation. The Question and answers have been prepared according to the Class 12 exam syllabus. Information about A Limited provides for the following information : ₹ 86,000 20,000 18,000 Closing Stock Creditors Cash Bills Receivable Sales Fixed Assets Bank Overdraft 1,20,000 42,000 34,000 Calculate: (a) Current Ratio, (b) Quick Ratio, (c) Inventory Turnover Ratio, (d) Fixed Assets Turnover Ratio. [Ans. (a) 1.6: 1, (b) 0.767: 1, (c) 6 Times, (d) 5 Times.]? covers all topics & solutions for Class 12 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for A Limited provides for the following information : ₹ 86,000 20,000 18,000 Closing Stock Creditors Cash Bills Receivable Sales Fixed Assets Bank Overdraft 1,20,000 42,000 34,000 Calculate: (a) Current Ratio, (b) Quick Ratio, (c) Inventory Turnover Ratio, (d) Fixed Assets Turnover Ratio. [Ans. (a) 1.6: 1, (b) 0.767: 1, (c) 6 Times, (d) 5 Times.]?.
Solutions for A Limited provides for the following information : ₹ 86,000 20,000 18,000 Closing Stock Creditors Cash Bills Receivable Sales Fixed Assets Bank Overdraft 1,20,000 42,000 34,000 Calculate: (a) Current Ratio, (b) Quick Ratio, (c) Inventory Turnover Ratio, (d) Fixed Assets Turnover Ratio. [Ans. (a) 1.6: 1, (b) 0.767: 1, (c) 6 Times, (d) 5 Times.]? in English & in Hindi are available as part of our courses for Class 12.
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A Limited provides for the following information : ₹ 86,000 20,000 18,000 Closing Stock Creditors Cash Bills Receivable Sales Fixed Assets Bank Overdraft 1,20,000 42,000 34,000 Calculate: (a) Current Ratio, (b) Quick Ratio, (c) Inventory Turnover Ratio, (d) Fixed Assets Turnover Ratio. [Ans. (a) 1.6: 1, (b) 0.767: 1, (c) 6 Times, (d) 5 Times.]?, a detailed solution for A Limited provides for the following information : ₹ 86,000 20,000 18,000 Closing Stock Creditors Cash Bills Receivable Sales Fixed Assets Bank Overdraft 1,20,000 42,000 34,000 Calculate: (a) Current Ratio, (b) Quick Ratio, (c) Inventory Turnover Ratio, (d) Fixed Assets Turnover Ratio. [Ans. (a) 1.6: 1, (b) 0.767: 1, (c) 6 Times, (d) 5 Times.]? has been provided alongside types of A Limited provides for the following information : ₹ 86,000 20,000 18,000 Closing Stock Creditors Cash Bills Receivable Sales Fixed Assets Bank Overdraft 1,20,000 42,000 34,000 Calculate: (a) Current Ratio, (b) Quick Ratio, (c) Inventory Turnover Ratio, (d) Fixed Assets Turnover Ratio. [Ans. (a) 1.6: 1, (b) 0.767: 1, (c) 6 Times, (d) 5 Times.]? theory, EduRev gives you an
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