Experts ratio Analysis sum plz solve all 5 parts
Dear Student
Let's assume Current Assets as Rs. 80,000 and Current Liability as Rs. 100,000.
Current Ratio= Current Assets/Current Liabilities
= 80,000/100000 = 0.8:1
A) Payment of trade payable will reduce Current ratio
Assume trade payable as 50,000
Current Ratio= 80,000 - 50,000/100000 - 50000 = 0.6:1 ( Reduce)
B) Purchase of goods on credit will improve Current ratio
Assume Goods as 50,000
Let's assume Current Assets as Rs. 80,000 and Current Liability as Rs. 100,000.
Current Ratio= Current Assets/Current Liabilities
= 80,000/100000 = 0.8:1
A) Payment of trade payable will reduce Current ratio
Assume trade payable as 50,000
Current Ratio= 80,000 - 50,000/100000 - 50000 = 0.6:1 ( Reduce)
B) Purchase of goods on credit will improve Current ratio
Assume Goods as 50,000
Current Ratio= 80,000 + 50,000/100000 +50000 = 0.87:1 (Improve)
C) Sale of furniture will improve Current ratio because it will increase Current Assets and current Liabilities remain constant.
D) Sale of goods will improve Current ratio because it will increase Current Assets and current Liabilities remain constant.
E) Payment of dividend payable reduce Current ratio.
Assume dividend payable as 50,000
C) Sale of furniture will improve Current ratio because it will increase Current Assets and current Liabilities remain constant.
D) Sale of goods will improve Current ratio because it will increase Current Assets and current Liabilities remain constant.
E) Payment of dividend payable reduce Current ratio.
Assume dividend payable as 50,000
Current Ratio= 80,000 - 50,000/100000 - 50000 = 0.6:1 ( Reduce)
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