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4.22 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,
2025 (`) 2024 (`)
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, 2025 31st March, 2024

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)
2025 = ` 4,00,000 + ` 2,00,000 + ` 1,50,000 7,50,000
2024 = ` 2,50,000 + ` 2,00,000 + ` 75,000 5,25,000
Current Liabilities = Short-term Borrowings + Trade Payables
2025 = ` 1,00,000 + ` 2,50,000 3,50,000
2024 = ` 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.