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MANAGEMENT ACCOUNTING

CHAPTER 3: RATIO ANALYSIS

QUESTION BANK

1. Given:
Current Ratio = 2.8
Acid-test ratio = 1.5
Working Capital = Rs. 1,62,000
Find out:
(a) Current Assets
(b) Current Liabilities (c) Liquid Assets

2.Given:
Current Ratio 2.5
Liquidity Ratio 1.5
Working Capital Rs. 60,000
Calculate:
(a) Current Liabilities
(b) Current Assets
(c) Liquid Assets
(d) Stock

3. Find out Current Assets
(a) When current ratio is 2.4 and working capital is Rs. 1,40,000.
(b) Calculate (i) current assets, (ii) liquid assets (iii) inventory, when current liabilities are Rs. 80,000, current ratio is 2:1, liquid ratio is 1.5:1, and prepaid expenses are Rs. 2,000. (c) Calculate current liabilities of a business concern whose current ratio is 2.2, liquid ratio 1.4, inventory Rs. 40,000 and prepare expenses are nil.
4. (a) If Apple Company Ltd’s Current ratio is 5.5:1, Quick ratio is 4 to 1. Inventory is Rs. 30,000, what are its Current liabilities? (b) If Orange Company Ltd’s inventory is Rs. 60,000, total current liabilities are Rs. 1,20,000, Quick ratio is 2 to 1, calculate Current ratio. (c) If DH Company Ltd’s Current liabilities are Rs. 25,000, Quick ratio is 1.5:1, inventory is Rs. 12,500, calculate current assets.

5. Calculate liquidity ratio from the following information and comment on them:

Balance Sheet of Nariman Ltd.
As on 31st March, 2000
Liabilities
Rs.
Assets
Rs.
Equity Share Capital
6,00,000
Goodwill
1,00,000
7% Debentures
3,50,000
Land and Building
2,30,000
Long-term Debts
2,00,000
Plant and Machinery
3,00,000
Bank Overdraft
75,000
3,00,000
Sundry Creditors
60,000
Sundry Debtors
1,50,000
Bills Payable
30,000

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