Q2 1. At the same time, acid-test ratio of the company indicates that for every current liability of Re. I the company has the quick assets of. Depending upon circumstances, this may be enough to assure the liquidity of the company.

Illustration 4.2 M/s Sunlight Ltd submits the following information for the year ending 31st December 1988: Sales during the year:

Cash 3,00,000 Credit 1 60000 Rs. 4,60,000 Stock: Rs. 40,000 opening Closing Rs. 60,000 Gross profit for the year Rs. 1,60,000 Trade debtors: 01-01-1988 Rs. 10,000 31-12-1988 Rs. 14,000 Bills Receivable: 01-01-1988 Rs, 9,000 31-12-1988 Rs. 7,000 You are required to calculate Inventory Turnover and Receivable Turnover from the above give information