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# Following is the Balance Sheet of Title Machine Ltd. as at March 31, 2017. - Accountancy

ConceptTypes of Ratios

#### Question

Following is the Balance Sheet of Title Machine Ltd. as at March 31, 2017.

 Particulars Amount Rs. I. Equity and Liabilities 1. Shareholders’ funds a) Share capital 24,00,000 b) Reserves and surplus 6,00,000 2. Non-current liabilities a) Long-term borrowings 9,00,000 3. Current liabilities a) Short-term borrowings 6,00,000 b) Trade payables 23,40,000 c) Short-term provisions 60,000 Total 69,00,000 II. Assets 1. Non-current Assets a) Fixed assets Tangible assets 45,00,000 2. Current Assets a) Inventories 12,00,000 b) Trade receivables 9,00,000 c) Cash and cash equivalents 2,28,000 d) Short-term loans and advances 72,000 Total 69,00,000

Calculate Current Ratio and Liquid Ratio.

#### Solution

1. Current Ratio

"Current Ratio" = "Current Assets"/"Current Liablities"

= "24,00,000"/"30,00,000"

= "0.8 : 1"

Current Assets = Inventories +Trade Receivables + Cash + Short term Loans and Advances

= 12,00,000 + 9,00,000 + 2,28,000 + 72,000

= Rs 24,00,000

Current Liabilities = Trade Payables + Short-term Borrowings + Short-term Provisions

= 23,40,000 + 6,00,000 + 60,000

= Rs 30,00,000

2. Quick Ratio

"Quick Ratio" = "Quick Assets"/"Current Liablities"

= "12,00,000"/"30,00,000"

= 0.4 : 1

Quick Assets = Trade Receivables + Cash + Short term Loans and Advances

= 9,00,000 + 2,28,000 + 72,000

= Rs 12,00,000

Is there an error in this question or solution?

#### APPEARS IN

Solution Following is the Balance Sheet of Title Machine Ltd. as at March 31, 2017. Concept: Types of Ratios.
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