Page 181 - AAAXII

M.172 An Aid to Accountancy—CBSE XII

X + X + ` 20,000 = ` 1,12,500
2X = ` 92,500
X = ` 92,500/2 = ` 46,250 (Opening Inventory)
Closing Inventory = ` 46,250 + ` 20,000 = ` 66,250.
Quick Assets
4. Quick Ratio =
Current Liabilities
Quick Assets
0.75 =
` 40,000
Quick Assets = ` 40,000 × 0.75 = ` 30,000
Current Assets = Quick Assets + Inventory (Closing)
= ` 30,000 + ` 66,250 = ` 96,250.
Or
Credit Revenue from Operations
(a) Trade Receivables Turnover Ratio =
Average Trade Receivables

` 6,00,000 (WN 1)
= = 3.75 Times.
` 1,60,000 (WN 2)
Working Notes:
1. Let the Credit Revenue from Operations = ` 100
Cash Revenue from Operations = ` 40
Total Revenue from Operations = ` 100 + ` 40 = ` 140
\ Credit Revenue from Operations = ` 100/` 140 × ` 8,40,000 = ` 6,00,000.
2. Opening Trade Receivables = ` 2,00,000 – ` 80,000 = ` 1,20,000
Opening Trade Receivables + Closing Trade Receivables
Average Trade Receivables =
2
` 1,20,000 + ` 2,00,000
= = ` 1,60,000.
2
Net Profit before Interest and Tax
(b) Interest Coverage Ratio =
Interest on Long-term Debt
` 7,82,000 (WN 2)
= = 10.86 Times.
` 72,000 (WN 1)
Working Notes:
1. Interest on Debentures = 12% of ` 6,00,000 = ` 72,000.

2. Calculation of Net Profit before Interest and Tax: `
Net Profit after Interest and Tax 4,97,000
Add: Tax @ 30% (i.e., ` 4,97,000 × 30/70) 2,13,000
7,10,000
Add: Interest on Debentures 72,000
Net Profit before Interest and Tax 7,82,000