BEE Ltd. has a current ratio of 2:1, showing enough short-term liquidity in the company. You are required to comment whether the current ratio will…
CA Intermediate · Financial Management and Strategic Management · PYQS · January 2026
BEE Ltd. has a current ratio of 2:1, showing enough short-term liquidity in the company. You are required to comment whether the current ratio will improve, decline, or remain unchanged. Sr. No Transaction Impact (i) A debtor owing - 60,000 becomes insolvent and only 75% is recovered in cash in full and final settlement. (ii) Issued equity shares for 2,00,000, proceeds kept in current account with bank. (iii) 25,000 collected from customers in cash. (iv) Goods costing 8,000 sold for 12,500 on credit.
Suggested Answer and Working Notes:
Sr. No. Transaction Impact on Current Ratio (i) A debtor owing - 60,000 becomes insolvent and only 75% is recovered in cash Declines (ii) Issued equity shares for 2,00,000, proceeds kept in current account with bank Improves (iii) 25,000 collected from customers in cash No change (iv) Goods costing - 8,000 sold for 12,500 on credit Improves
Topics: Part-A: Financial Management
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