Q1:How does Anandam's liquidity position compare to industry standards? Is it capable of meeting short-term obligations?
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A current ratio above 1 indicates that the company has more current assets than current liabilities, which is a positive sign for meeting short-term obligations. Show more…
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Phoenix has carried on business for a number of years as a retailer of a wide variety of consumer products, and it operates from a number of stores. In recent years, the entity has found it necessary to provide credit facilities to its customers in order to maintain growth in revenue. As a result of this decision, the liability to its bankers has increased substantially. Extracts from the financial statements for the year are provided below. INCOME STATEMENTS FOR THE YEARS ENDED 30 JUNE 20X7: Sm 1,850 1,250 600 (550) 50 45 (25) 70 (23) 47 20X8: Sm 2,200 0 0 0 700 (640) 60 60 (60) 60 (20) 40 20X9: Sm 2,500 (1,750) 750 0 1 50 0 6 (110) 30 (10) 20 Revenue Cost of sales Gross profit Other operating costs Profit before interest Interest from credit sales Interest payable Profit before taxation Income tax expense Profit for the year STATEMENTS OF FINANCIAL POSITION AT 30 JUNE 20X7: Sm 278 400 492 12 1,182 90 282 372 320 200 270 20 1,182 20X8: Sm 290 540 550 11 1,392 90 292 382 520 200 270 20 1,392 20X9: Sm 322 620 633 15 1,590 90 282 372 610 320 280 0 1,590 Property, plant and equipment Inventories Trade receivables Cash Total assets Share capital Reserves Bank loans Other interest-bearing borrowings Trade payables Tax payable Total equity and liabilities Other information Depreciation charged for the three years in question was as follows: Year ended 30 June 20X7: Sm 55 20X8: Sm 60 20X9: Sm 70 Required: Using suitable ratios, analyze the information provided and recommend what actions should be taken.
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Q. 2. Following particulars are given to you: â‚ą Goodwill 1,00,000 Inventories 2,50,000 Trade Receivables 1,35,000 Less: Provision 5,000 1,30,000 Investments (Short term) 30,000 Expenses Paid in Advance 20,000 Cash and Cash Equivalents 40,000 Accrued Income 10,000 Short-term Provision 20,000 Short-term Borrowings (Bank Overdraft) 30,000 Trade Payables 95,000 Expenses Payable 5,000 Calculate the Current Ratio and Quick Ratio. What conclusions do you draw from these ratios? [Ans. Current Ratio 3.2:1; Quick Ratio 1.4:1; Short-term financial position of the Company is quite satisfactory.] Hint: Accrued Income is included in current assets as well as in quick assets.
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Following are the particulars pertaining to Assets and Liabilities of a company 5000 equity shares $10 each 500000 8% 2000 pre shares $100 each 200000 9% 4000 Debentures of $ 100 each 400000 Reserves 300000 Creditors 150000 Bank overdraft 50000 Land & Building 500000 Plant & Machinery 600000 Debtors 200000 Stock 240000 Cash and Bank 5500 Prepaid expenses 5000. Q-1) Calculate current ratio. Q-2) Calculate Debt to equity ratio. Q-3) Liquid Assets do not include. a) Bills receivable b) Debtors c) Inventory d) Bank Balance. Q-4) Calculate Liquidity ratio.
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