Following information is given by a company from its books of accounts as on March 31, 2017:
`{:("Particulars",,Rs.),("Inventory",,1_(,)00_(,)000),("Total Current Assets",,1_(,)60_(,)000),("Shareholders’funds",,4_(,)00_(,)000),(13%"Debentures",,3_(,)00_(,)000),("Current liabilities",,1_(,)00_(,)000),("Net Profit Before Tax",,3_(,)51_(,)000),("Cost of revenue from operations",,5_(,)00_(,)000):}`
Calculate:
i) Current Ratio
ii) Liquid Ratio
iii) Debt Equity Ratio
iv) Interest Coverage Ratio
v) Inventory Turnover Ratio

Explanation

i) Current Ratio `=("Current Assets")/("Current Liabilities")`
`=(Rs. 1,60,000)/(Rs. 1,00,000)= 1.6 : 1`
ii) Liquid Assets = Current assets – Inventory
= Rs. 1,60,000 – Rs. 1,00,000
= Rs. 60,000
Liquid Ratio `=("Liquid Assets")/("Current Liabilities")`
`=(Rs. 60,000)/(Rs. 1,00,000) = 0.6 : 1`
iii) Debt-Equity Ratio `=("Long-term Debts")/("Shareholders’ Funds")`
`=(Rs. 3,00,000)/(Rs. 4,00,000) = 0.75 : 1`
iv) Net Profit before Interest = Net Profit before Tax + Interest on Long term Debts
& Tax = Rs. 3,51,000 + (`13%` of Rs. 3,00,000)
= Rs. 3,51,000 + Rs. 39,000 =
Rs. 3,90,000
Interest Coverage Ratio `=("Net Profit before Interest & Tax")/("Interest on Long Term Debts")`
`=(Rs. 3,90,000)/(Rs. 39,000)` = 10 times
v) Inventory Turnover Ratio `=("Cost of Revenue from Operations")/("Average Inventory")`
`=(Rs. 5,00,000)/(Rs. 1,00,000)` = 5 times
Note: In absence of information regarding ‘Inventory in the beginning’ and ‘Inventory at the end’, the ‘Inventory’ is treated as Average Inventory.