From the information given below calcualte (i) current ratio and (ii) Debt to Equity ratio:
Information: Net profit of the year Rs 80000, fixed assets Rs200000, closing inventory Rs 10000, other current assets Rs100000, Current Liabilities Rs 30000, Equity share capital Rs 10000, 10% preference share capital Rs 70000, 12% Debentures Rs 60000 and Revenue from operations i.e Net sales during the year Rs 500000.

Explanation

(i) Current ratio=`("current assets")/("Current liablilites")=(Rs 110000)/(Rs 30000)`
Current assets=Closing inventory + other current assets
=Rs 10000+Rs 100000=Rs 110000.
(ii) debt to equity ratio=`("Debt")/("Equity (shareholders'funds)")`
`=(Rs 60000)/(R 250000)=0.24:1`