1.Taking into consideration extract of Profit and Loss Account and Balance Sheet of Reliable India Ltd. calculate Liquidity, Profitability and Solvency Ratios. Also, as a consultant guide your client whether he should purchase shares of this company or not. And secondly as a bank whether additional loan should be given to this company or not. Give proper reasons to justify your answer.

Trading and Profit & Loss Account of Reliable India Ltd. for the year ended 31st March,2021

Particulars

Amount in Rs

Particulars

Amount in Rs.

To Opening Stock

90,000

By Sales

9,00,000

To Purchases

5,60,000

By Closing Stock

90,000

To Wages

2,14,000

1

To Gross Profit

1,26,000

Total

9,90,000

Total

9,90,000

To Salaries

16,000

By Gross Profit

1,26,000

To Electricity

10,000

To Misc. Expenses

10,000

To Depreciation

30,000

To Net Profit

60,000

1,26,000

1,26,000

Balance Sheet of Reliable India Ltd.as on 31st March,2021

Liabilities

in Rs.

Assets

in Rs.

Equity Share Capital

1,80,000

Fixed Assets less Depreciation (5,40,000-1,50,000)

3,90,000

Reserves and Surplus

1,20,000

Stock

90,000

Secured Loans

2,10,000

Debtors

1,05,000

Creditors

90,000

Cash

15,000

600,000

600,000

1. Taking into consideration extract of Profit and Loss Account and Balance Sheet of Reliable India Ltd. calculate Liquidity, Profitability and Solvency Ratios. Also, as a consultant guide your client whether he should purchase shares of this company or not. And secondly as a bank whether additional loan should be given to this company or not. Give proper reasons to justify your answer. Trading and Profit & Loss Account of Reliable India Ltd. for the year ended 31" March, 2021 Particulars Amount in Particulars Amount in Rs Rs. To Opening 90,000 By Sales 9,00,000 Stock To Purchases 5,60,000 By Closing 90,000 Stock To Wages 2,14,000 1 To Gross Profit 1,26,000 Total 9,90,000 Total 9,90,000 To Salaries 16,000 By Gross Profit 1,26,000 To Electricity 10.000 To Misc. 10,000 Expenses To Depreciation 30,000 To Net Profit 60,000 1,26,000 1,26,000 Balance Sheet of Reliable India Ltd.as on 31 March 2021 Liabilities in Rs. Assets in Rs. Equity Share 1,80,000 Fixed Assets less 3.90,000 Capital Depreciation (5,40,000-1,50.000) Reserves and 1,20,000 Stock 90,000 Surplus Secured 2,10,000 Debtors 1,05,000 Loans Creditors 90,000 Cash 15.000 600,000 600,000 181