= 1 If Current Liabilities Current Assets= 2.5 It means the difference or Working Capital Working Capital is 1.5 Therefore, Current Assets Current Liabilities As Liquidity Ratio And Current Liabilities Therefore, the Liquid Assets (bank and debtors) (2,00,000 x 1.5) Stock (5,00,000 - 3,00,000, i.e., current assets - liquid assets) = 1.5 = 3,00,000 = 5,00,000 = 2.00.000 = 1.5 = 2,00,000 161 361 = 3,00,000 = * 2.00,000 Cost of Sales (as stock turnover ratio is 6) = 12,00,000 Sales (as G.P. ratio is 20 per cent, 20 12,00,000+ x12,00,000 = 15,00,000 80 Fixed Assets are 12,00,000/2 since fixed assets turnover ratio is 2 = 6,00,000 Debtors are 15,00,000/6 since debt collection period is 2 months = 2,50,000 ShareholdersNet Worth 6,00,00 x 1 = 7.50,000 0.80 Out of Shareholders' Net Worth Reserves and Surplus = 2.50,000 Therefore, share capital = 5,00,000 Illustration 11.24. The following extracts of financial information relate to Curious Ltd.: BALANCE SHEET as on 31st December (in lakhs Particulars 2005 2004 Share Capital 10 10 Reserve and Surplus 30 10 Loan Fund 60 70 100 00 Fixed Assets (Net) 30 20 30 Current Assets: Stocks 30 20 Debtors 30 30 Cash and Bank balances 10 20 Other Current Assets 30 10 100 80 Less: Current Liabilities 30 20 Net Working Capital 70 60 Total Assets 100 90 Sales ( in lakhs) 270 300 (a) Calculate, for the two years Debt Equity Ratio, Quick Ratio and Working Capital Turnover Ratio; and (b) Find the sales volume that should have been generated in 2005 if the Company were to have maintained its Working Capital Turnover Ratio