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M.146 An Aid to Accountancy—CBSE XII

Quick Assets Quick Assets
2. Quick Ratio = = 0.75 =
Current Liabilities ` 2,40,000
Quick Assets = ` 2,40,000 × 0.75 = ` 1,80,000.
3. Current Assets = Quick Assets + Closing Inventory = ` 3,18,000.
(b) Uses of Return on Investment:
(i) It measures overall profitability of an enterprise.
(ii) It can be used for evaluating Investment Decision.
Or
(a)
S.No. Effect on Operating Ratio Reason
(i) No change Purchases and Closing Inventory will increase by same amount and thus Operating
expenses will not change.
(ii) No change Purchases and Closing Inventory will decrease by same amount and thus Operating
expenses will not change.
(iii) No change Purchases and Closing Inventory will decrease by same amount and thus Operating
expenses will not change.
(iv) No change No change in Operating Expenses as Machinery is an asset.
Cost of Revenue from Operations
(b) Inventory Turnover Ratio = = ... Times.
Average Inventory*
Opening Inventory + Closing Inventory
*Average Inventory =
2
23. CASH FLOW STATEMENT for the year ended 31st March, 2018
Particulars ` `
A. Cash Flow from Operating Activities
Net Profit before Tax and Extraordinary Items:
Closing Balance of Surplus, i.e., Balance in Statement of Profit and Loss 9,00,000
Less: Opening Balance of Surplus, i.e., Balance in Statement of Profit and Loss 5,00,000
4,00,000
Add: Provision for Tax (Current Year) 50,000
Interim Dividend 2,00,000
Dividend on Preference Shares* (12% of ` 10,00,000) 1,20,000
Net Profit before Tax 7,70,000
Adjustment for Non-Cash and Non-Operating Items:
Depreciation on Machinery 7,00,000
Interest on Debentures 1,00,000
Patents written off 40,000 8,40,000
16,10,000
Less: Gain (Profit) on Sale of Machinery (WN) 60,000
Operating Profit before Working Capital Changes 15,50,000
Add: Decrease in Current Assets and Increase in Current Liabilities:
Inventories 2,00,000
Trade Receivables 2,00,000
Trade Payables 9,50,000 13,50,000
Less: Decrease in Current Liabilities: 29,00,000
Outstanding Expenses 30,000
Net Cash Generated from Operating Activities 28,70,000
Less: Tax Paid 30,000
Cash Flow from Operating Activities 28,40,000