Business AdministrationCSS

Q. No. 7. The following data relates to ABC Company

ABC Company

Income statement Sales R            

 Sales             Rs. 500,000

Cost of goods sold         300,000

Operating expenses       60,000

Interest expenses           10,000

Income tax expenses    40,000

Net income      Balance sheet                90,000

 Asset

Cash       Rs 10,000

Accounts receivable             15,000

Inventory        15,000

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Equipment           455,000

Total: Liabillies Rs

Accounts payable      Rs 12,000

Long-term notes payable         48,000

Shareholder’s equity: 

Capital stock          300,000

Retained earnings    140,000

Total:     500,000

Find and interpret the company’s

                    (I) Current ratio                              (ii) Quick ratio                   (iii) Average collection period

                    (iv) Time interest earned           (v) Inventory turn over

Q. no. 7. the following data relates to abc company

Interpretation: The current ratio of 3.33 indicates that the company has Rs. 3.33 in current assets for every Rs. 1 in current liabilities. This suggests the company is in a strong position to meet its short-term obligations.

Q. no. 7. the following data relates to abc company
Q. no. 7. the following data relates to abc company
Q. no. 7. the following data relates to abc company

Interpretation: A TIE ratio of 14 means the company earns 14 times its interest expense, indicating a strong ability to cover its interest payments.

Q. no. 7. the following data relates to abc company

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