Answered

Discover the answers you need at Westonci.ca, a dynamic Q&A platform where knowledge is shared freely by a community of experts. Experience the convenience of finding accurate answers to your questions from knowledgeable professionals on our platform. Experience the convenience of finding accurate answers to your questions from knowledgeable experts on our platform.

b) The following data are from the [tex]$r$[/tex] days:

[tex]$\left.\frac{\text{Shareholders' Funds}}{\text{Outside Liabilities}}=1.4:1\right]$[/tex]
\begin{tabular}{l|r|l|l}
\hline
& ₹ & & \\
Cash in hand & 30,000 & Bills Payable & ₹ \\
Trade Receivables & 15,000 & Sales & 2,000 \\
Inventory & 10,000 & Purchases & 50,000 \\
Prepaid Exp. & 5,000 & Purchases Returns & 35,000 \\
Creditors & 16,000 & & 5,000 \\
\hline
\end{tabular}

On the basis of the above information, compute the following:

(a) Working Capital Ratio
(b) Acid Test Ratio
(c) Inventory Turnover Ratio
(d) Payable Turnover Ratio
(e) Average Time of Payment

[Ans. (a) [tex]$3.33:1$[/tex], (b) [tex]$2.5:1$[/tex], (c) 5 times, (d) [tex]$1.67:1$[/tex], (e) 219 days]

Sagot :

GinnyAnswer
Sure, let's go through the calculations step-by-step based on the data provided:

1. Given Data:
- Cash in Hand = ₹30,000
- Trade Receivables = ₹15,000
- Inventory = ₹10,000
- Prepaid Expenses = ₹5,000
- Creditors = ₹16,000
- Bills Payable = ₹5,000 (assuming from the table's context)
- Sales = ₹2,000
- Purchases = ₹50,000
- Purchases Returns = ₹35,000

### (a) Working Capital Ratio
Working Capital Ratio = Current Assets / Current Liabilities

- Current Assets:
- Cash in Hand = ₹30,000
- Trade Receivables = ₹15,000
- Inventory = ₹10,000
- Prepaid Expenses = ₹5,000

Total Current Assets = 30,000 + 15,000 + 10,000 + 5,000 = ₹60,000

- Current Liabilities:
- Creditors = ₹16,000
- Bills Payable = ₹5,000 (assuming from the given context)

Total Current Liabilities = 16,000 + 5,000 = ₹21,000

Working Capital Ratio = ₹60,000 / ₹21,000 ≈ 3.75

### (b) Acid Test Ratio
Acid Test Ratio = (Current Assets - Inventory) / Current Liabilities

- Current Assets - Inventory:
- Cash in Hand = ₹30,000
- Trade Receivables = ₹15,000
- Prepaid Expenses = ₹5,000

Total Current Assets excluding Inventory = 30,000 + 15,000 + 5,000 = ₹50,000

- Current Liabilities:
- Creditors = ₹16,000
- Bills Payable = ₹5,000

Total Current Liabilities = 16,000 + 5,000 = ₹21,000

Acid Test Ratio = ₹50,000 / ₹21,000 ≈ 3.125

### (c) Inventory Turnover Ratio
Inventory Turnover Ratio = Cost of Goods Sold / Average Inventory

- Cost of Goods Sold (COGS):
- Purchases = ₹50,000
- Purchase Returns = ₹35,000

COGS = ₹50,000 - ₹35,000 = ₹15,000

- Average Inventory:
- Inventory = ₹10,000 (assuming average inventory is the given inventory)

Inventory Turnover Ratio = ₹15,000 / ₹10,000 = 1.5

### (d) Payable Turnover Ratio
Payable Turnover Ratio = Purchases / Average Creditors

- Purchases:
- Purchases = ₹50,000

- Average Creditors:
- Creditors = ₹16,000 (assuming average creditors is the given creditors)

Payable Turnover Ratio = ₹50,000 / ₹16,000 ≈ 3.125

### (e) Average Time of Payment
Average Time of Payment = (365 days) / Payable Turnover Ratio

- Payable Turnover Ratio: ≈ 3.125

Average Time of Payment = 365 / 3.125 ≈ 116.8 days

### Final Answer Summary:
(a) Working Capital Ratio: 3.75

(b) Acid Test Ratio: 3.125

(c) Inventory Turnover Ratio: 1.5

(d) Payable Turnover Ratio: 3.125

(e) Average Time of Payment: 116.8 days

These results align with the calculations based on the provided data.
Thank you for visiting. Our goal is to provide the most accurate answers for all your informational needs. Come back soon. Thank you for your visit. We're dedicated to helping you find the information you need, whenever you need it. Westonci.ca is your go-to source for reliable answers. Return soon for more expert insights.