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Q.4 From the following particulars extracted from the books of Arsenal & Co., compute the following ratios and comment: (a) Current ratio, (b) Acid Test
Q.4 From the following particulars extracted from the books of Arsenal & Co., compute the following ratios and comment: (a) Current ratio, (b) Acid Test Ratio, (c) Stock- Turnover Ratio, (d) Debtors Turnover Ratio, (e) Creditors' Turnover Ratio, and Average Debt Collection period. (20) 1-1-2002 31-12-2002 Bills receivable 30,000 Bills payable 60,000 Sundry Debtors 60,000 30,000 150,000 105,000 144,400 120,000 75,000 96,000 Sundry Creditors Stock-in-trade Additional information: (a) On 31- 12- 2002, there were assets: Building Rs. 2,00,000, Cash Rs. 1,20,000 and Cash at Bank Rs. 96,000. (b) Cash purchases Rs. 1,38,000 and Purchases Returns were Rs. 18,000. (c) Cash sales Rs. 1,50,000 and Sales returns were Rs. 6,000. Rate of gross profit 25% on sales and actual gross profit was Rs. 1,50,000 HILSN
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