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Accounting Ratios — Accountancy STD 12 Commerce — Question

CBSE BoardEnglish MediumSTD 12 CommerceAccountancyAccounting Ratios6 Marks
Question
Calculate Current Ratio, Quick Ratio and Debt to Equity Ratio from the figures given below:
Particulars
₹
Inventory.
Prepaid Expenses.
Other Current Assets.
Current Liabilities.
12% Debentures.
Accumulated Profits.
Equity Share Capital.
Non-current Investments.
30,000
2,000
50,000
40,000
30,000
10,000
1,00,000
15,000
✓

Answer

  1. Current Assets = Inventory + Prepaid Expenses + Other Current Assets
= 30,000 + 2,000 + 50,000 = 82,000
Current Liabilities = 40,000
Current Ratio = $\frac{\text{Current Assets}}{\text{Current Liabilities}}$
= $\frac{82,000}{40,000}=2.05:1$
  1. Liquid Assets = Current Assets - Inventory - Prepaid Expenses
= 82,000 - 30,000 - 2,000 = 50,000
Quick Ratio = $\frac{\text{Liquid Assets}}{\text{Current Liabilities}}$
$\frac{50,000}{40,000}=1.25:1$
  1. Long-term Debts = 12% Debentures = 30,000
Equity = Accumulated Profits + Equity Share Capital
= 10,000 + 1,00,000 = 1,10,000
Debt- Equity Ratio = $\frac{\text{Long-Term Debts}}{\text{Equity}}$
$\frac{30,000}{1,10,000}=0.27:1$

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