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Accounting Ratios                                                             3.11
                     Illustration 6.
                     Following  is  the  Statement  of  Profit  &  Loss  of  Hindustan  Products  Limited  for  the  year
                     ended 31st March, 2024 and the Balance Sheet of the company as at that date:
                                        STATEMENT OF PROFIT & LOSS  for the year ended 31st March, 2024
                     Particulars                                                      Note No.    `
                       I.  Revenue from Operations                                               8,00,000
                       II.  Expenses:
                         Purchases of Stock-in-Trade                                             5,45,000
                         Change in Inventories of Stock-in-Trade                         1      (1,00,000)
                         Other Expenses                                                          2,95,000
                         Total Expenses                                                          7,40,000
                      III.  Profit for the Period (I – II)                                        60,000
                     Note: Other expenses include direct expenses of ` 15,000.
                                                 BALANCE SHEET as at 31st March, 2024
                     Particulars                                                      Note No.    `
                      I.  EQUITY AND LIABILITIES
                         1.  Shareholders’ Funds
                            (a)  Share Capital                                                   2,90,000
                            (b)  Reserves and Surplus                                             60,000
                         2.  Current Liabilities
                            (a)  Trade Payables (Creditors)                                      1,15,000
                            (b)  Other Current Liabilities (Outstanding Expenses)                 15,000
                         Total                                                                   4,80,000
                       II.  ASSETS
                         1.  Non-Current Assets
                           Property, Plant and Equipment and Intangible Assets:
                             — Property, Plant and Equipment                                     2,30,000
                         2.  Current Assets
                            (a)  Inventories (Stock)                                             1,99,000
                            (b)  Trade Receivables (Debtors)                                      21,000
                            (c)  Cash and Cash Equivalents                                        30,000
                         Total                                                                   4,80,000
                     Note to Accounts
                     Particulars                                                                   `
                       1.  Change in Inventories of Stock-in-Trade
                        Opening Inventory                                                         99,000
                        Less:  Closing Inventory                                                 1,99,000
                                                                                                (1,00,000)
                     Calculate the following ratios:
                     (i) Quick Ratio and (ii) Inventory Turnover Ratio.
                     Solution:
                                          Quick Assets
                       (i)    Quick Ratio =
                                        Current Liabilities
                                        Cash and Cash Equivalents  Trade Receivables (Debtors)
                                      =
                                                Trade Payables  Outstanding Expenses
                                         `  30,000      21,000  `  51,000
                                                   `
                                      =                     =         = 0.39 : 1 .
                                                   `
                                        `  1,15,000      15,000  `  1,30,000
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