Question
Calculate Current Ratio and Quick Ratio from the following Balance Sheet:
✓
Answer
Current Ratio $=\frac{\text{Current Assets}}{\text{Current Liabilities}}$ Current Assets = Inventory+ Trade Receivables + Cash & Cash Equivalents + Prepaid Exp. = ₹ 4,20,000 + ₹ 6,30,000 + ₹ 90,000 + ₹ 12,000 = ₹ 11,52,000 Current Liabilities = Trade Payables + Outstanding Expenses + Income Tax Provision = ₹ 4,10,000 + ₹ 20,000 + ₹ 50,000 = ₹ 4,80,000 Current Ratio $= \frac{₹\ 11,52,000}{₹\ 4,80,000}= 2.4:1$ Quick Ratio $=\frac{\text{Liquid Assets}}{\text{Current Liabilities}}$ Liquid Assets = Trade Receivables + Cash & Cash Equivalents = ₹ 6,30,000 + ₹ 90,000 = ₹ 7,20,000Quick Ratio $=\frac{₹\ 7,20,000 }{₹\ 4,80,000 }=1.5:1$
Throw light on the short-term financial position of the Company with the help of suitable ratios.
Throw light on the short-term financial position of the Company with the help of suitable ratios.
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