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12th Class Accountancy Accounting Ratios Question Bank Case Based - Accounting Ratios

  • question_answer
    Direction Q. 1 to 4
    Read the following hypothetical text and answer the given questions:
    Balance Sheet of Vihaan Ltd. as at 31st March 2018,2019 and 2020
    Particulars Note No 2018 (Rs.) 2019 (Rs.) 2020 (Rs.)
    I.EQUITY AND LIABILITIES 1. Shareholders' Funds:  Share Capital  Reserves and Surplus 1 70,000 10,000 1,00,000     35,000 90,000 25,000
    2. Non-current Liabilities: Long-term Borrowings 2 35,000 45,000 62,500
    3. Current Liabilities:  Short-term Borrowings  Short-term Provisions 3 4 7,500 12,500 5,000 10,000 10,000 25,000
    Total 1,35,000 1.95.000 2,12,000
    II.ASSETS 1. Non-current Assets: Fixed Assets: (i) Tangible (ii) Intangible  Non-current Investments 5 6 90,500 5,000 10,000 1,46,500 10,000 15,000 1,60,000 7,500 6,000
    2. Current Assets:  Current Investments  Inventories  Cash and Cash Equivalents 7 7,000 7,200 15,300 4,000 12,200 7,300 15,000 12,000 12,000
    Total 1,35,000 1,95,000 2,12,500
    Notes to Accounts:
    Note No. Particulars 2018 (Rs.) 2019 (Rs.) 2020 (Rs.)
    1. Reserves and Surplus (Surplus, i.e., Balance in the Statement of Profit and Loss) 10,000 35,000 25,000
    10,000 35,000 25,000
    2. Long-term Borrowings 12% Debentures 35,000 45,000 62,500
    35,000 45,000 62,500
    3. Short-term Borrowings Bank Loan 7,500 5,000 10,000
    7,500 5,000 10,000
    4. Short-term Provisions: Provision for Tax 12,500 10,000 25,000
    12,500 10,000 25,000
    5. Tangible Assets: Machinery Accumulate-d Depreciation 1,04,500 (14,000) 1,67,500 (21,000) 1,84,000 (24,000)
    90,500 1,46,500 1,60,000
    6. Intangible Assets: Goodwill 5,000 10,000 7,500
    5,000 10,000 7,500
    7. Inventories Stock-in-Trade 7,200 12,200 12,000
    7,200 12,200 12,000
    Based on the above information you are required to answer the following questions:
    Current ratio for year 2019 will be:

    A) 1.57 : 1

    B) 0.75 : 1

    C) 2.35 : 1

    D) 4.7: 1

    Correct Answer: A

    Solution :

    [a] 1.57 : 1
    Hint: \[\operatorname{Current} Ratio = \frac{current Assets}{Current Liabilities}\]
    \[\frac{\begin{array}{*{35}{l}}    Current Investments + Inventories+  \\    Cash and Cash Equivalent  \\ \end{array}}{Short-term Borrowings + Short-term Provisions}\]
    \[\frac{4,000+12,200+7,300}{5,000+10,000}\]=> \[\frac{23,500}{15,000}\]=1.57:1


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