Q. 6. Answer the following (10)

a)

A firms current assets and current liabilities are Rs 1,600 lacs and Rs 1,000 lacs respectively. How much can the firm borrow on a short term basis without reducing the current ratio below 1.25?

b)

Determine the current liabilities of a firm given the following information: (10)

Sales = 720,000 Quick ratio = 0.8 Current assets = 200,000 Inventory turnover ratio = 6