Liquid Ratio 1.5; Current Ratio 2.5; Stock Turnover Ratio (COGS/Closing Stock) 6 times and Net Working Capital Rs 3,00,000. Find out COGS
Answers
Answer:
Given,
Current ratio = 2.5 : 1
Quick Ratio = 1.5 : 1
Net working capital = 60,000
Net working capital = Current assets - Current liabilities
Current Assets = Net working capital + Current liabilities
= 60,000 + Current liabilities (1)
Current ratio = Current assets
-------------------------
Current liabilities
Current Assets = Current liabilities x 2.5 (2)
Merging equation (1) and (2)
60,000 + Current liabilities = 2.5Current liabilities
60,000 = 2.5 current liabilities - Current liabilities
60,000 = 1.5 Current liabilities
Current liabilities = 60,000
--------------
1.5
= 40,000
Therefore, current liabilities = 40,000
Explanation:
Liquidity ratio 1.5
Net working capital ` 3,00,000
Fixed assets turnover ratio (on cost of sales) 2 times
Average debt collection period 2 months
Stock turnover ratio (cost of sales/closing stock) 6 times
Gross profit ratio 20%
Fixed assets/shareholders net worth 0.80
Reserve and surplus/capital 0.50
Draw up the balance sheet of the company XYZ Ltd.