Question 31:
The Quick Ratio of a company is 0.8:1. State with
reason, whether the following transactions will increase, decrease or not
change the Quick Ratio:
(i) Purchase of loose tools for ₹2,000; (ii)
Insurance premium paid in advance ₹500; (iii) Sale of goods on credit
₹3,000; (iv) Honoured a bills payable of
₹5,000 on maturity.
Answer:
|
Transaction |
Impact |
|
Purchase of loose tools ₹2,000 |
As cash is going out, quick assets
are decreasing by 2,000. So, quick ratio will decrease. |
|
Insurance premium paid in advance ₹500 |
As cash is going out, quick assets
are decreasing by 500. So, quick ratio will decrease. |
|
Sale of goods on credit ₹3,000 |
As debtors increase, quick assets
also increase by 3,000. So, quick ratio will increase. |
|
Honoured a bills payable ₹5,000 on
maturity |
As cash is going out, quick assets
are decreasing by 5,000 and since bill is honoured
current liabilities are decreasing. Thus, quick ratio will decrease. |
Question 32:
Capital Employed ₹20,00,000;
Fixed Assets ₹14,00,000; Current Liabilities ₹2,00,000. There are
no Long-term Investments. Calculate Current Ratio.
Answer:
Capital Employed = 20,00,000
Fixed Assets = 14,00,000
Current Assets = Capital Employed + Current Liabilities
− Fixed Assets
= 20,00,000 + 2,00,000 −
14,00,000 = 8,00,000
Current ratio= Current Assets/ Current
liabilities=8,00,000/2,00,000=4:1
Question 33:
Venus Limited's Inventory is ₹3,00,000. Total Liquid Assets are ₹12,00,000
and Quick Ratio is 2:1. Work out Current Ratio.
Answer:
Quick ratio = Quick
Assets/Current assets=2:1
Quick Assets = 12,00,000
Current liabilities Quick
assets/2=12,00,000/2=6,00,000
Current Assets = Quick Assets + Stock
= 12,00,000 + 3,00,000 = 15,00,000
Current ratio= Current assets / Current liabilities=15,00,000/6,00,000=2.5:1
Question 34:
Total Assets ₹11,00,000; Fixed
Assets ₹5,00,000; Capital Employed ₹10,00,000. There were no
Long-term Investments.
Calculate Current Ratio.
Answer:
Current Assets = Total Assets − Fixed Assets
Fixed Assets = 5,00,000
Total Assets = 11,00,000
∴ Current Assets = 11,00,000
− 5,00,000 = 6,00,000
Current Liabilities = Total Assets − Capital Employed
= 11,00,000 − 10,00,000 =
1,00,000
Current ratio= Current Assets/ Current
liabilities=6,00,000/1,00,000=6:1
Question 35:
From the following calculate: (i) Current Ratio; and (ii) Quick Ratio:
|
|
₹ |
|
|
₹ |
|
Total Debt |
12,00,000 |
|
Long-term Borrowings |
4,00,000 |
|
Total Assets |
16,00,000 |
|
Long-term Provisions |
4,00,000 |
|
Fixed Assets (Tangible) |
6,00,000 |
|
Inventories |
1,90,000 |
|
Non-current Investment |
1,00,000 |
|
Prepaid Expenses |
10,000 |
|
Long-term Loans and Advances |
1,00,000 |
|
|
|
Answer:
(i)
Current
ratio
Current RatioCurrent Assets=Total Assets-Fixed Assets-Non-Current Investment - Long term Loans and Advances
=16,00,000-6,00,000-1,00,000-1,00,000=
₹8,00,000
Current Liabilities=Total Debt - Non-Current Liabilities
=12,00,000-4,00,000-4,00,000=
₹4,00,000
Current Ratio=Current AssetsCurrent Liabilities
=8,00,000/4,00,000=2:1
(ii)
Quick Ratio
Quick Assets=Current Assets-Stock-Prepaid Expenses
=8,00,000-1,90,000−10,000=
₹6,00,000
Quick Ratio=Quick Assets/Current Liabilities
=6,00,000/4,00,000=1.5:1
Ts Grewal Solution 2025-2026
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Class 12 / Volume – III
Chapter 4 – Accounting Ratios