DK Goel Solutions: Accounting Ratios
Q1: From the following, compute the current ratio.
Ans: 
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
= Rs. 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
= Rs. 2,00,000/-
Q2: Following particulars are given to you:
Calculate the Liquidity Ratios.
Ans:
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= Rs. 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
= Rs. 2,40,000/-
Liquid Assets = Current Assets - Inventories - Income Tax Paid in Advance
= 7,20,000 - 3,90,000 - 30,000
= 3,00,000
