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Topic : Analysis of Financial Statments

Discussion Question:

Working capital management is a crucial task for the companies to maintain short term liquidity of their business. It includes management of all constituents of working capital and ignorance of any element can cause serious liquidity issues. Changes in one of these elements affect the overall working capital of the company. Cargo Intel has to pay Rs. 250,000 to its creditors without sacrificing the liquidity. Company also aims to make payment to creditors without increasing the current liabilities. Among various measures of liquidity ratio; management has decided to use “Quick Ratio” as a measure of liquidity. Company has following two options to make payment to creditors:

Option 1. Using cash of Rs. 150,000 and selling marketable securities of Rs. 100,000 for the payment to creditors (NOTE: ignore profit or loss on sale of marketable securities)

Option 2. Taking short term loan of Rs. 220,000 and selling marketable securities of Rs. 30,000 for the payment to creditors (NOTE: ignore profit or loss on sale of marketable securities)

Following information has been extracted from financial statements of the company for the current year:





Fixed assets


Short term debt


Marketable securities


Account receivables








Long term loan


Machine and equipment


You are required to calculate:
  1. Quick ratio before using any option
  2. Quick ratio for option 1
  3. Quick ratio for option 2

Which option you will suggest considering the stated objectives of the company. Support your selection with reasoning.


Calculations are mandatory for all parts, avoid irrelevant details otherwise marks will be deducted.

Important Instructions:

  • Post your GDB comments (answer) against GDB # 01 rather than against lessons’ MDB.
  • Your discussion must be based on logical facts.
  • Do not copy or exchange your answer with other students.  Two identical / copied comments will be marked Zero (0) and may damage your grade in the course.
  • Books, websites and other reading material may be consulted before posting your comments; but copying or reproducing the text from books, websites and other reading materials is strictly prohibited. Such comments will be marked as Zero (0) even if you provide references.
  • Obnoxious or ignoble answer should be strictly avoided.
  • Questions / queries related to the content of the GDB, which may be posted by the students on MDB or via e-mail, will not be replied till the due date of GDB.

For Detailed Instructions, please read the GDB # 01 announcement.

Best of Luck!!

Views: 2890

Replies to This Discussion

there is no need to add inventory in current assets coz inventory is going to be subtracted anyway. So make it simple by not adding the inventory.

any plz upload solution

inventry add nai krni less krni ha 400,0000 kro gay ap less current asset me say


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