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Cost and Management Accounting




                    Notes
                                       !
                                     Caution  Standard norm of the ratio:

                                     The ideal norm is 1:1 which means that one rupee of current liabilities is matched with one
                                     rupee of quick assets.

                                   11.3.3 Super Quick Assets Ratio

                                   It is the ratio which establishes the relationship in between the super quick assets and quick
                                   liabilities of the fi rm.
                                   The super quick assets are nothing but the current assets which can be more easily converted into
                                   cash to meet out the quick liabilities.
                                   The super quick liabilities are the current liabilities should have to be met out at faster pace
                                   within shorter span in duration.

                                       Super Quick Assets = Cash + Marketable Securities
                                       Super Quick Liabilities = Current Liabilities — Bank Overdraft
                                                               Super Quick Assets
                                       Super Quick Assets Ratio =
                                                              Super Quick Liabilities
                                       !
                                     Caution  Standard norm of the ratio:
                                     Higher the ratio, better is the position of the fi rm.


                                          Example: From the following calculate current ratio:

                                                                                                 (`)
                                   Current Assets:
                                   Cash in Hand                                              4,00,000

                                   Sundry Debtors                                            1,60,000
                                   Stock                                                     2,40,000
                                   Current Liabilities:
                                   Sundry Creditors                                          3,00,000
                                   Bills Payable                                             1,00,000

                                   Solution:
                                                      Current Assets  `  8,00,000
                                       Current Ratio =               =          = 2
                                                     Current Liabilities  `  4,00,000
                                   Self Assessment

                                   Fill in the blanks:
                                   5.   Current assets ratio establishes the relationship in between the ...................... and current
                                       liabilities.






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