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Summary of a Balance sheet of XYZ Company
Current Liabilities (in Crores)
Cash Credit - 800
Trade Creditors - 4500
Other Current Liabilities - 1200
Total Current Liabilities – 6500
Current Assets (in Crores)
Cash - 1500
Inventory - 5000
Debtors - 1400
Other Current Assets - 600
Total Current Assets - 8500
Find out
1. Current Ratio
a. 1
b. 1.31
c. 1.5
d. 2
Ans - b
Current Ratio = CA/CL = 8500/6500 = 1.31
2. Acid-Test Ratio
a. 0.33
b. 0.54
c. 0.66
d. 0.75
Ans - b
Acid-Test Ratio = Quick Assets/CL = (CA-Inv)/CL = (8500-5000)/6500 = 3500/6500 = 0.54
3. Net Working Capital
a. 2000
b. 3500
c. 6500
d. 8500
Ans - a
Net Working Capital = CA - CL = 8500 - 6500 = 2000
4. Working Capital Cap
a. 1400
b. 2800
c. 5700
d. 6500
Ans - b
Working Capital Cap = CA - (CL - BB) = 8500 - (6500 - 800(CC)) = 8500 - 5700 = 2800
5. MPBF as per Tandon Committee - Method-I
a. 700
b. 1400
c. 2100
d. 3000
Ans - c
MPBF as per Tandon Committee - Method-I = WCG - 25% of WCG = 2800 - 25% of 2800 = 2800 - 700 = 2100
6. MPBF as per Tandon Committee - Method-II
a. 675
b. 750
c. 875
d. 950
Ans - a
MPBF as per Tandon Committee - Method-II = WCG - 25% of CA = 28000 - 25% of 8500 = 2800 - 2125 = 675
7. Current Ratio as per Tandon Committee - Method-I
a. 1
b. 1.09
c. 1.33
d. 1.66
Ans - b
Current Ratio as per Tandon Committee - Method-I = CA / (MPBF + Trade Creditors + Other CL) = 8500 / (2100+4500+1200) = 8500 / 7800 = 1.09
8. Current Ratio as per Tandon Committee - Method-II
a. 1
b. 1.09
c. 1.33
d. 1.66
Ans - c
Current Ratio as per Tandon Committee - Method-II = CA / (MPBF + Trade Creditors + Other CL) = 8500 / (675+4500+1200) = 8500 / 6375 = 1.33
9. Borrowing by the way of Cash Credit when compared with Tandon Committee - Method-I
a. 700
b. 1000
c. 1300
d. 1800
Ans - c
Borrowing by the way of Cash Credit = 800
MPBF as per Tandon Committee - Method-I = 2100
So, Borrowing by the way of Cash Credit is short by (2100 - 800) = 1300 Crores
10. Borrowing by the way of Cash Credit when compared with Tandon Committee - Method-II
a. 100
b. 125
c. 150
d. 175
Ans - b
Borrowing by the way of Cash Credit = 800
MPBF as per Tandon Committee - Method-II = 675
So, Borrowing by the way of Cash Credit is excess by (800 - 675) = 125 Crores
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