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3.22                                         Analysis of Financial Statements—CBSE XII
                      II.  ASSETS
                        1.  Non-Current Assets
                          (a)  Property, Plant and Equipment and Intangible Assets:
                              —Property, Plant and Equipment                         6,00,000    5,50,000
                          (b)  Non-current Investments                               1,00,000    1,00,000
                        2.  Current Assets
                          (a)  Inventories                                           3,50,000    2,75,000
                          (b)  Trade Receivables                                     4,00,000    2,50,000
                          (c)  Cash and Cash Equivalents                             2,00,000    2,00,000
                          (d)  Other Current Assets                           2      2,00,000    1,00,000
                        Total                                                        18,50,000    14,75,000


                     Notes to Accounts
                       Particulars                                                  31st March,   31st March,
                                                                                      2024 (`)   2023 (`)
                       1.  Short-term Borrowings
                          Bank Overdraft                                                60,000    50,000
                          Loan Against Fixed Deposit                                    40,000    25,000
                                                                                       1,00,000    75,000
                       2.  Other Current Assets
                          Prepaid Expenses                                              50,000    25,000
                          Advances for Purchases of Goods                              1,50,000    75,000
                                                                                       2,00,000    1,00,000

                     Solution:

                     Liquid Ratio                         31st March, 2024         31st March, 2023

                       Liquid or Quick Assets                  `  7,50,000             `  5,25,000
                     =                                                              =
                         Current Liabilities                   `  3,50,000             `  2,75,000
                                                             =  2.14 : 1               = 1.91 : 1
                     Working Note:                                                         `        `
                        Liquid Assets  =  Trade Receivables + Cash and Cash Equivalents +
                                      Other Current Assets (Advances for Purchases)
                               2024  =  ` 4,00,000 + ` 2,00,000 + ` 1,50,000             7,50,000
                               2023  =  ` 2,50,000 + ` 2,00,000 + ` 75,000                        5,25,000
                     Current Liabilities =   Short-term Borrowings + Trade Payables
                               2024  =  ` 1,00,000 + ` 2,50,000                          3,50,000
                               2023  =  ` 75,000 + ` 2,00,000                                     2,75,000


                      Always Remember:  While calculating Current Ratio and Liquid (Quick) Ratio ‘Provision for Doubtful Debts’
                      and ‘Provision for Discount on Debtors’ are deducted from Trade Receivables.
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