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Summary of a Balance sheet of XYZ Company
Current Liabilities (in Crores)
Cash Credit - 3200
Trade Creditors - 9500
Other Current Liabilities - 2000
Total Current Liabilities - 14700
Current Assets (in Crores)
Cash - 5000
Inventory - 14000
Debtors - 4200
Other Current Assets - 2000
Total Current Assets - 25200
Find out
1. Current Ratio
a. 1.61
b. 1.71
c. 1.81
d. 1.91
Ans - b
Current Ratio = CA/CL = 25200/14700 = 1.71
2. Acid-Test Ratio
a. 0.71
b. 0.76
c. 0.81
d. 0.86
Ans - b
Acid-Test Ratio = Quick Assets/CL = (CA-Inv)/CL = (25200-14000)/14700 = 11200/14700 = 0.76
3. Net Working Capital
a. 10000
b. 10500
c. 11000
d. 11500
Ans - b
Net Working Capital = CA - CL = 25200 - 14700 = 10500
4. Working Capital Gap
a. 12700
b. 13200
c. 13700
d. 14200
Ans - c
Working Capital Gap = CA - (CL - BB) = 25200 - (14700 - 3200(CC)) = 25200 - 11500 = 13700
5. MPBF as per Tandon Committee - Method-I
a. 10275
b. 10775
c. 13700
d. 17300
Ans - a
MPBF as per Tandon Committee - Method-I = WCG - 25% of WCG = 13700 - 25% of 13700 = 13700 - 3425 = 10275
6. MPBF as per Tandon Committee - Method-II
a. 6200
b. 6700
c. 7200
d. 7400
Ans - d
MPBF as per Tandon Committee - Method-II = WCG - 25% of CA = 13700 - 25% of 25200 = 13700 - 6300 = 7400
7. Current Ratio as per Tandon Committee - Method-I
a. 1.01
b. 1.06
c. 1.11
d. 1.16
Ans - d
Current Ratio as per Tandon Committee - Method-I = CA / (MPBF + Trade Creditors + Other CL) = 25200 / (10275+9500+2000) = 25200 / 21725 = 1.16
8. Current Ratio as per Tandon Committee - Method-II
a. 1.07
b. 1.09
c. 1.23
d. 1.33
Ans - d
Current Ratio as per Tandon Committee - Method-II = CA / (MPBF + Trade Creditors + Other CL) = 25200 / (7400+9500+2000) = 25200 / 18900 = 1.33
9. Borrowing by the way of Cash Credit when compared with Tandon Committee - Method-I
a. 7025
b. 7075
c. 7125
d. 7175
Ans - b
Borrowing by the way of Cash Credit = 3200
MPBF as per Tandon Committee - Method-I = 10275
So, Borrowing by the way of Cash Credit is short by (10275 - 3200) = 7075 Crores
10. Borrowing by the way of Cash Credit when compared with Tandon Committee - Method-II
a. 4200
b. 4600
c. 5000
d. 5400
Ans - a
Borrowing by the way of Cash Credit = 3200
MPBF as per Tandon Committee - Method-II = 7400
So, Borrowing by the way of Cash Credit is short by (7400 - 3200) = 4200 Crores
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