question_answer

The balance sheet of Kartik Ltd as at 31st March, 2017 is given below: Balance Sheet as at 31st March, 2017

	Particulars	Note No.	31st March, 2017 Amt (Rs.)
I.	EQUITY AND LIABILITIES
	1. Shareholders' Funds
	(a) Share Capital		96,000
	(b) Reserves and Surplus		24,000
	2. Non-current Liabilities
	Long-term Borrowings : 10% Debentures		60,000
	3. Current Liabilities
	(a) Trade Payables		93,600
	(b) Short-term Provisions		2,400
	Total		2,76,000
II.	ASSETS
	1. Non-current Assets
	Fixed Assets
	(i) Tangible		1,80,000
	2. Current Assets
	(a) Inventories		48,000
	(b) Trade Receivables		36,000
	(c) Cash and Cash Equivalents		9,120
	(d) Other Current Assets: Prepaid Expenses		2,880
	Total		2,76,000

Compute the following ratios:      

(i) Current ratio

(ii) Liquid ratio

Answer:

Current ratio = 1 : 1, Liquid ratio = 0.47 : 1