Photo AI

Balance Sheet for Chalker Pty Ltd as at year ending 30 June 2012 Current Assets $ Cash 8 000 Receivables 12 000 Inventories 15 000 35 000 Non-Current Assets Property, Plant and Equipment 33 000 Total Assets 68 000 Current Liabilities Creditors 14 000 Non-Current Liabilities Loan 20 000 Owners Equity Capital 15 000 Retained Net Profit 19 000 34 000 Total Liabilities and Owners Equity 68 000 (a) Calculate the current ratio (current assets ÷ current liabilities) of this business - HSC - SSCE Business Studies - Question 22 - 2012 - Paper 1

Question icon

Question 22

Balance-Sheet-for-Chalker-Pty-Ltd-as-at-year-ending-30-June-2012--Current-Assets-$--Cash-8-000-Receivables-12-000-Inventories-15-000-35-000--Non-Current-Assets-Property,-Plant-and-Equipment-33-000--Total-Assets-68-000--Current-Liabilities-Creditors-14-000--Non-Current-Liabilities-Loan-20-000--Owners-Equity-Capital-15-000-Retained-Net-Profit-19-000-34-000--Total-Liabilities-and-Owners-Equity-68-000--(a)-Calculate-the-current-ratio-(current-assets-÷-current-liabilities)-of-this-business-HSC-SSCE Business Studies-Question 22-2012-Paper 1.png

Balance Sheet for Chalker Pty Ltd as at year ending 30 June 2012 Current Assets $ Cash 8 000 Receivables 12 000 Inventories 15 000 35 000 Non-Current Assets Prope... show full transcript

Worked Solution & Example Answer:Balance Sheet for Chalker Pty Ltd as at year ending 30 June 2012 Current Assets $ Cash 8 000 Receivables 12 000 Inventories 15 000 35 000 Non-Current Assets Property, Plant and Equipment 33 000 Total Assets 68 000 Current Liabilities Creditors 14 000 Non-Current Liabilities Loan 20 000 Owners Equity Capital 15 000 Retained Net Profit 19 000 34 000 Total Liabilities and Owners Equity 68 000 (a) Calculate the current ratio (current assets ÷ current liabilities) of this business - HSC - SSCE Business Studies - Question 22 - 2012 - Paper 1

Step 1

Calculate the current ratio (current assets ÷ current liabilities)

96%

114 rated

Answer

To calculate the current ratio, we first need to identify the current assets and current liabilities from the balance sheet.

  1. Current Assets:

    • Cash: $8,000
    • Receivables: $12,000
    • Inventories: $15,000

    Total Current Assets = 8,000+8,000 + 12,000 + 15,000=15,000 = 35,000

  2. Current Liabilities:

    • Creditors: $14,000

  3. Current Ratio Calculation:

    Current Ratio=Current AssetsCurrent Liabilities=35,00014,000=2.5Current\ Ratio = \frac{Current\ Assets}{Current\ Liabilities} = \frac{35,000}{14,000} = 2.5

Thus, the current ratio is 2.5.

Step 2

Calculate the debt to equity ratio (total liabilities ÷ total equity)

99%

104 rated

Answer

In this calculation, we will determine the total liabilities and total equity from the balance sheet.

  1. Total Liabilities:

    • Current Liabilities: $14,000 (Creditors)
    • Non-Current Liabilities: $20,000 (Loan)

    Total Liabilities = 14,000+14,000 + 20,000 = $34,000

  2. Total Equity:

    • Capital: $15,000
    • Retained Net Profit: $19,000

    Total Equity = 15,000+15,000 + 19,000 = $34,000

  3. Debt to Equity Ratio Calculation:

    Debt to Equity Ratio=Total LiabilitiesTotal Equity=34,00034,000=1Debt\ to\ Equity\ Ratio = \frac{Total\ Liabilities}{Total\ Equity} = \frac{34,000}{34,000} = 1

Thus, the debt to equity ratio is 1.

Join the SSCE students using SimpleStudy...

97% of Students

Report Improved Results

98% of Students

Recommend to friends

100,000+

Students Supported

1 Million+

Questions answered

;