Question

Study the balance sheet and answer the following questions below

MAVOKO TRADERS BALANCE SHEET As at 31st Dec 2000
Fixed assets			Capital	422,930
Premises Furniture Machinery Motor car	300,000 51,500 140,000 190,000	(681,500)	Add Net profit Less drawings	220,500 (175,000)	468,450
Current Assets			LTL
Stock Debtors Cash at bank Cash at hand	124,500 103,650 54,850 3,650	(286,650)	Mortage loan Bank loan	300,000 100,000	400,000
968,150			Current liabilities
			Creditors		99,720
			968,150

   

1. Calculate:
   1. Working Capital (WC)
   2. Return on capital (ROC)
   3. Borrowed capital
   4. Current ratio
   5. Quick ratio

Answer 1

1. Working Capital (WC) 
   WC= CA-CL
   =288,650 - 99,720= 188,930
2. Return on capital (ROC) 
   =Net profit/capital invested x100
   220,500/422,930 x 100
   =52.13%
3. Borrowed capital 
   =long term loan=400,000
4. Current ratio 
   =CA/CL
   =288,650/99720 x 100
   2.89%
5. Quick ratio 
   CA - stock/CL
   =288,650 - 124,500 x 100
          99720
   =165%