Question
Given below is the Balance Sheet of ABC Co. Ltd. Balance Sheet 31.12.2019 31.12.2018 Cash 50,000 40,000 Bills Receivable 1,00,000 60,000 Inventory 1,50,000 1,00,000 Equipment
Given below is the Balance Sheet of ABC Co. Ltd. Balance Sheet 31.12.2019 31.12.2018 Cash 50,000 40,000 Bills Receivable 1,00,000 60,000 Inventory 1,50,000 1,00,000 Equipment 12,00,000 8,00,000 Total Assets 15,00,000 10,00,000 Bills payable 1,50,000 1,00,000 Long term Bonds 4,00,000 4,00,000 Common Stock 6,00,000 3,00,000 Retained earnings 3,50,000 2,00,000 Total Liabilities 15,00,000 10,00,000 a) Compute the Current Ratio, Liquid Ratio and Debt- Equity Ratio for both the year and comment the results. b)The income statement for 2019 reported: Net Sales Rs. 16,00,000, COGS Rs. 6,00,000 and Net Income Rs. 1,50,000.Compute the following ratio for 2019 : Inventory Turnover , Return on Sales and Return on Equity . Comment the results. c) Identify all the ratios of most concern to creditors along with formulas .Explain why creditors are most interested in these ratios. d) Identify the ratios of most concern to shareholders along with formulas. Explain why shareholders are most interested in these ratios.
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