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Accounting Ratios 3.21
Solution:

Current Ratio 31st March, 2024 31st March, 2023
Current Assets ` 13,00,000 ` 10,50,000
=  =
Current Liabilities ` 8,00,000 ` 5,50,000
= 1.63 : 1 = 1.91 : 1
Working Note: ` `
Current Assets = Inventories (Excluding Stores and Spares) + Trade
Receivables + Cash and Cash Equivalents + Other
Current Assets
2024 = ` 4,00,000 + ` 5,00,000 + ` 2,00,000 + ` 2,00,000 13,00,000
2023 = ` 3,00,000 + ` 4,50,000 + ` 2,00,000 + ` 1,00,000 10,50,000
Current Liabilities = Short-term Borrowings + Trade Payables + Other Current Liabilities
2024 = ` 2,00,000 + ` 4,50,000 + ` 1,50,000 8,00,000
2023 = ` 1,00,000 + ` 3,50,000 + ` 1,00,000 5,50,000

Liquid Ratio 31st March, 2024 31st March, 2023
Liquid or Quick Assets ` 8,50,000 ` 7,25,000
=  =
Current Liabilities ` 8,00,000 ` 5,50,000
= 1.06 : 1 = 1.32 : 1

Working Note: ` `
Liquid Assets = Trade Receivables + Cash and Cash Equivalents +
Other Current Assets (Advances to Staff)
2024 = ` 5,00,000 + ` 2,00,000 + ` 1,50,000 8,50,000
2023 = ` 4,50,000 + ` 2,00,000 + ` 75,000 7,25,000
Current Liabilities = Short-term Borrowings + Trade Payables + Other Current Liabilities
2024 = ` 2,00,000 + ` 4,50,000 + ` 1,50,000 8,00,000
2023 = ` 1,00,000 + ` 3,50,000 + ` 1,00,000 5,50,000
Illustration 16.
Following is the Balance Sheet of Financial Services Ltd. as at 31st March, 2024. You are
required to calculate Liquid Ratio for the two years.

BALANCE SHEET as at 31st March, 2024
Particulars Note 31st March, 31st March,
No. 2024 (`) 2023 (`)
I. EQUITY AND LIABILITIES
1. Shareholders’ Funds
(a) Share Capital 5,00,000 5,00,000
(b) Reserves and Surplus 2,50,000 2,00,000
2. Non-Current Liabilities
Long-term Borrowings 7,50,000 5,00,000
3. Current Liabilities
(a) Short-term Borrowings 1 1,00,000 75,000
(b) Trade Payables 2,50,000 2,00,000
Total 18,50,000 14,75,000