Page 77 - DCOM302_MANAGEMENT_ACCOUNTING

Management Accounting

Notes 2. Liquid Assets ` 65,000; Stock ` 20,000; Pre-paid expenses ` 5,000; Working capital ` 60,000.
Calculate current assets ratio and liquid assets ratio.
3. The current ratio of Bicon Ltd. is 4.5:1 and liquidity ratio is 3:1 stock is ` 6,00,000. Find out
the current liabilities.

4. From the following information, prepare a balance sheet show the workings
`
(a) Working capital 75,000
(b) Reserves and surplus 1,00,000

(c) Bank overdraft 60,000
(d) Current ratio 1.75
(e) Liquid Ratio 1.15
(f) Fixed assets to proprietors’ fund .75
(g) Long term liabilities Nil
5. Debtors velocity 3 months

Creditors velocity 2 months
Stock velocity 8 times
Capital turnover ratio 2.5 times
Fixed assets turnover ratio 8 times

Gross profit turnover ratio 25%

Gross profit in a year amounts to ` 1,60,000 .There is no long term loan or overdraft.
Reserves and surplus amount to ` 56,000. Liquid assets are ` 1,94,666. Closing stock of
the year is ` 4,000 more than the opening stock Bill receivable amount to ` 10,000 and bills
payable to ` 4,000
(a) Find out

(i) Sales
(ii) Closing stock
(iii) Sundry debtors
(iv) Fixed assets

(v) Sundry creditors
(vi) Proprietors’ fund.
(b) Draft the balance sheet with as many as details as possible.
6. You have been hired as an analyst for Mellon Bank and your team is working on an
independent assessment of Daffy Duck Food In(c) (DDF In(c)) DDF In(c) is a fi rm that
specializes in the production of freshly imported farm products from France. Your assistant
has provided you with the following data for Flipper Inc. and their industry.

Ratios 2009 2008 2007 2009-Industry Average
Long-term debt 0.45 0.40 0.35 0.35
Inventory Turnover 62.65 42.42 32.25 53.25
Contd…

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