The company's position is quite sound from the point of view of liquidity, solvency and profitability. However, its activity ratios particularly in terms of the utilisation of total assets and holding of stock do not seem to be adequate. Illustration 9 The balance sheet of Major Ltd. as on 31st March, 2013 is as under. Liabilities Assets Share capital: Fixed assets: | 462,000 equity shares of At cost 5,00,000 8100 each fully paid 2,00,000 Less: Depreciation 1.60.000 3,40,000 8% preference shares 1,00,000 General reserve 60,000 Current assets: 12% debentures 60,000 Stock 60,000 Current liabilities: Debtors 80,000 Sundry creditors 80.000 Bank 20.000 5.00.000 5.00.000 The company wishes to forecast balance sheet as on 31st March, 2014. The following additional particulars are available: ) Fixed assets costing 21,00,000 have been installed on 1st April, 2013 but the payment will be made on 31st March, 2014 (i) The fixed assets tumover ratio on the basis of gross value of fixed assets would be 1.5. () The stock turnover ratio would be 14.4 (calculated on the basis of average stock). (iv) The break up of cost and profit would be as follows: Material 40% Labour 25% Manufacturing expenses 10% Office and selling expenses 10% Depreciation 5% Profit 100% The profit is subject to interest and taxation at 50% (v) Debtors would be 179 of sales. (vi) Creditors would be 1/5 of material consumed. (vi) in March 2014 a dividend @ 10% on equity capital would be paid. (vill) 12% debentures for 25,000 have been issued on 1st April, 2013. Prepare the forecast balance sheet as on 31st March, 2014 and show the following resultant ratios: (a) Current ratio: (b) Fixed assetset worth ratio, and (c) Debt equity ratio. 10%