From the books of AIL Limited following information is taken for the year 2024-25: Particulars Amount Gross profit margin (25% of Sales) 30,00,000…

(i) Sales = 30,00,000 / 0.25 = 1,20,00,000 Gross Profit = 30,00,000 Cost of goods sold (COGS) = Sales - Gross Profit = 90,00,000 Average Inventory = (Cost of goods sold (COGS) / Inventory Turnover) = (90,00,000 x 28) / 360 = 7,00,000 Opening Inventory + Closing Inventory / 2 = 7,00,000 8,00,000 + Closing Inventory = 7,00,000 x 2 Closing Inventory = 6,00,000 (ii) Current Ratio = Current Assets (CA) / Current Liabilities (CL) Or, CA / CL = 1.2 / 1 ∴ CA = 1.2 CL ...... (1) Quick Ratio = Quick Assets / Current Liabilities = (Current Assets - 6,00,000) / Current Liabilities Or, 0.8CL = CA - 6,00,000 CA = 0.8CL + 600000 ...... (2) Equating 1 and 2 1.2 CL = 0.8CL + 6,00,000 CL = 15,00,000 CA = 1.2 CL = 18,00,000 Working Capital = CA – CL = 18,00,000 – 15,00,000 = 3,00,000 (iii) Basic Defense Interval Ratio = (Cash and Bank balances + Marketable Securities) / (Operating Expenses (Cash) ÷ No. of days) Cash Operating Expenses = COGS + Selling and Dist. Exp - Depreciation and Non-cash expenditures = 90,00,000 + 12,00,000 - 4,80,000 = 97,20,000 Quick Assets = 18,00,000 – 6,00,000 = 12,00,000 Basic Defense Interval Ratio = 12,00,000 / (97,20,000 ÷ 360) = 12,00,000 / 27,000 = 44.44 days