# DK Goel Solutions for Class 12 Accountancy Vol 2 Chapter 5 Accounting Ratios

DK Goel Accountancy Class 12 Solutions Vol 2 Chapter 5 Accounting Ratios which is outlined by expert Accountancy teachers from the latest version of DK Goel Accountancy Class 12 textbook solutions. We at BYJUâ€™S provide DK Goel Solutions to assist students to comprehend all the theories in particular. Learn more concepts in Accountancy, however, the concepts of Admission of a partner, Accounting Ratios and Cash Flow Statement (As per AS – 3 Revised) is required.

## DK Goel Solutions Class 12 – Chapter 5 – Part B

Question 1

From the following, compute the current ratio.

 â‚¹ Non-Current Investments 1,00,000 Current Investments 40,000 Inventories (including loose tools of â‚¹ 50,000/-) 2,80,000 Trade Receivables: Sundry Debtors 1,60,000 Bills Receivables 20,000 Trade Payables: Sundry Creditors 1,20,000 Bills Payables 10,000 Long-term Borrowings 2,00,000 Short-term Borrowings 50,000 Short-term Provision (Provision for Tax) 20,000 Cash and Bank Balance 30,000

Solution:

$$\begin{array}{l}Current\, Ratio=\: \frac{Current\: Assets}{Current\: Liabilities}\end{array}$$

Current Assets = Current Investments + Inventories (Excluding Loose Tools) + Trade Receivables (Sundry Debtors + Bills Receivables) + Cash and Bank Balance

= 40,000 + 2,30,000 + 1,60,000 + 20,000 + 30,000

= â‚¹. 4,80,000/-

Current Liabilities = Trade Payables (Sundry Creditors + Bills Payables) + Short term Borrowings + Short term Provision (Provision for Tax)

= 1,20,000 + 10,000 + 50,000 + 20,000

= â‚¹. 2,00,000/-

$$\begin{array}{l}Current\, Ratio=\: \frac{4,80,000}{2,00,000} = 2:4:1\end{array}$$

Question 2

Following particulars are given to you:

 â‚¹ Trade Investmests 2,50,000 Marketeable Secuities 40,000 Tangible Fixed Assets 6,00,000 Intangible Assets (Goodwill) 1,00,000 Trade Receivables 2,00,000 1,80,000 Less: Provision for Doubtful Debts 20,000 Cash and Bank Balance 80,000 Trade Payables 1,20,000 Rent Payables 10,000 Dividend Payable 30,000 Inventories 3,90,000 Long term Borrowings (8% Debentures) 2,80,000 Short term Borrowings (Bank Overdraft) 25,000 Short term Provisions: Provisions for Tax 55,000 Income Tax paid in Advance 30,000

Calculate the Liquidity Ratios.

Solution:

Liquidity Ratios include the following 2 ratios. Namely,

• Current ratio
• Quick ratio
$$\begin{array}{l}Current\, Ratio\, =\, \frac{Current\, Assets}{Current\, Liabilities}\end{array}$$

Current Assets = Marketable Securities + Trade Receivables + Cash and Bank Balance + Inventories + Income Tax paid in advance

= 40,000 + 1,80,000 + 80,000 + 3,90,000 + 30,000

= â‚¹. 7,20,000/-

Current Liabilities = Trade Payables + Rent Payable + Dividend Payable + Bank Overdraft + Provisions for Tax

= 1,20,000 + 10,000 + 30,000 + 25,000 + 55,000

= â‚¹. 2,40,000/-

$$\begin{array}{l}Current \, Ratio\, =\, \frac{7,20,000}{2,40,000}\, =\, 3:1\end{array}$$

$$\begin{array}{l}Quick\, Ratio\, =\, \frac{Liquid\, Assets\, or\, Quick\, Assets}{Current\, Liabilities}\end{array}$$

Liquid Assets = Current Assets – Inventories – Income Tax Paid in Advance

= 7,20,000 – 3,90,000 – 30,000

= 3,00,000

$$\begin{array}{l}Quick\, Ratio\, =\, \frac{3,00,000}{2,40,000}\, =\, 1.25:1\end{array}$$

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 DK Goel Accountancy Solutions Class 12 â€“ Part B (Chapter wise) Chapter 1 Financial Statements of Companies (As per Schedule III) Chapter 2 Financial Statements Analysis Chapter 3 Tools for Financial Analysis: Comparative Statements Chapter 4 Common Size Statements Chapter 6 Cash Flow Statement (As per AS â€“ 3 Revised)

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