Answer in Accounting for simran #171618

A company having a net working capital of Rs 2.8 Lakhs as on 30-6-2018 indicates thefollowing financial ratios and performances figures:Current ratio 2.4Liquidity ratio 1.6Inventory turnover (on cost of sales) 8Gross profit on sales 20%Credit allowed (months) 1.5The company’s fixed assets is equivalent to 90% of its net-worth (share capital plus reserve)while reserves amounted to 40% of share capital.Prepare the balance sheet of the company as on 30-6-2018 showing step by step calculations.

find the missing data

“Current ratio=frac{current assets}{current liabilities}”

“2.4=frac{2.8}{current liabilities}”

current liabilities=1.2

“Liquidity ratio=frac{Cash + Accounts Receivables + Marketable Securities}{Current Liabilities}”

“1.6=frac{Cash + Accounts Receivables + Marketable Securities}{1.2}”

Cash + Accounts Receivables + Marketable Securities=1.92

Inventory=current assets-Cash + Accounts Receivables + Marketable Securities=2.8-1.92=0.88

“Inventory turnover =frac{cost of sales}{Inventory}”

“8 =frac{cost of sales}{0.88}”

cost of sales=7.04

let the share capital be 4

“net-worth (share capital plus reserve)=4+0.4times4=5.6”

“fixed assets=0.9times net-worth (share capital plus reserve)=0.9times5.6=5.04” net-worth (share capital plus reserve)

the balance sheet of the company as on 30-6-2018:

fixed assets – 5.04

current assets – 2.8

total assets – 7.84

net-worth (share capital plus reserve) – 5.6

retained earnings – 1.04

current liabilities – 1.2

total Â liabilities- 7.84

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