Let the current liabilities = x;
Current ratio = 3.5:1
Therefore, current assets = 3.5 x
Quick ratio = 2 :1
Therefore, quick or liquid assets = 2x
Liquid assets Current assets - Inventory
2x = 3.5x - 1,50,000
⇒ 2x - 3.5x - 1,50,000  (or)
1.5x = -1,50,000
x = \(\frac { 1,50,000 }{ 1.5 } \) = 1,00,000
Current liabilities = Rs.1,00,000
Current assets = 3.5 x 1,00,000
= Rs.3,50,000
Values that can be associated with the business are
(i) Doing Your Best : Business is doing its beast in keeping its liquidity ratios well above the ideal ratios.
(ii) Safety: Business shows safety towards its short-term creditors by maintaining such short-term solvency ratios.

Values reflected by the company are
(i) Doing Your Best: A company does its best by analysing the financial ratios and enabling the interested parties in taking better decisions about investing and tending.
(ii) Transparent: A company works towards transparency by simplifying the accounting information for various users.

Current ratio = \(\frac { Current\quad assets }{ Current\quad liabilities } \)
= \(\frac { 10,00,000 }{ 4,00,000 } \) = 2.5:1
Yes, it is satisfactory, as it exceeds the ideal ratio of 2:1
Value exhibited by Maxell Ltd. is ability to honour their debts on time.

(i) Gross profit ratio: Gross profit ratio is the proportion of gross profit to net revenue from operations. Gross profit ratio shows the margin of profit available out of revenue from operations. It is computed as below:
Gross profit ratio = \(\frac { Gross\quad profit }{ Net\quad revenue\quad from\quad operations } \) x 100
(ii) Net profit ratio: Net profit ratio is the percentage of net profit on revenue from operations. It is calculated as under:
Net profit ratio = \(\frac { Net\quad profit\quad after\quad tax }{ Revenue\quad from\quad operations } \) x 100

Debt collection period is the average time taken to collect the amount due from trade receivables. Lesser the debt collection period, greater is the efficiency of management in collection of cash from trade receivables. It is calculated as follows:
Debt collection period (in days) = \(\frac { Number\quad of\quad days\quad in\quad a\quad year }{ Tradereceivablesturnoverratio } \)
Debt collection period (in months) =\(\frac { Number\quad of\quad days\quad in\quad a\quad year }{ Trade\quad payable\quad sturn\quad over\quad ratio } \).

(i) Long-term solvency means the firm's ability to meet its liabilities in the long run.
(ii) Long term solvency ratios help to determine the ability of the business to repay its debts in the long run.
(iii) The following ratios are normally computed for evaluating long term solvency of the business:
(i) Debt equity ratio
(ii) Proprietary ratio
(iii) Capital gearing ratio

Traditional classification of ratio is done on the basis of the financial statements from which the ratios are calculated. Under the traditional classification, the ratios are classified as:
(i) Balance sheet ratios,
(ii) Income statement ratios and
(iii) Inter-statement ratio.
(i) Balance sheet ratio: If both items in a ratio are from balance sheet, it is classified as balance sheet ratio.
(ii) Income statement ratio: If the two items in a ratio are from income statement, it is classified as income statement ratio.
(iii) Inter-statement ratio: If a ratio is computed with one item from income statement and another item from balance sheet, it is called inter-statement ratio.

(i) Rights issue
Issue of equity shares to the existing shareholders of the company through a letter of offer is known as rights issue.
(ii) Bonus issue
Issue of equity shares to the existing shareholders of the company free of cost out of accumulated profit is known as bonus issue.

(i) Public issue
Issue of equity shares to the public through prospectus by a public company is called public issue. It includes initial public offer and further public offer.
(ii) Private placement
Private placement means any offer of equity shares or invitation to subscribe equity shares to a select group of persons by a company (other than by way of public offer) through issue of a private placement offer letter and which satisfies the conditions specified in Section 42 of the Indian Companies Act, 2013.

Following are the characteristics of a company:
(a) Voluntary association: A company is a voluntary association of persons. No law can compel persons to form a company
(b) Separate legal entity: Company is an artificial person. It has a separate legal entity which is separate and distinct from its members.
(c) Common seal: A company may have a common seal which can be affixed on the documents.
(d) Perpetual succession: A company continues for ever. Its continuity is not affected by the changes in its members. It can be wound up only by law.
(e) Limited liability: The liability of the shareholders of the company is limited to the extent of face value of the shares held by the shareholders.
(f) Transferability of shares: The shares of a company are freely transferable except incase of a private company.

(i) Horizontal analysis
(1) When figures relating to several years are considered for the purpose of analysis, the analysis is called horizontal analysis.
(2) Comparative statements and trend percentages are examples of horizontal analysis.
(ii) Vertical analysis:
(1) When figures relating to one accounting year alone are considered for the purpose of analysis, the analysis is called vertical analysis.
(2) Preparation of common size statements and computation of ratios are examples of vertical analysis.

Following are the limitations of financial statement analysis
(i) All the limitations of financial statements such as ignoring non-monetary information, ignoring price level chances, etc., are applicable to financial statement analysis also.
(ii) Expert knowledge is required in analysing the financial statements.
(iii) Interpretation of the analysed data involves personal judgement as different experts may give different views

Following are the features of financial statements.
(i) Financial statements are generally prepared at the end of an accounting period based on transactions recorded in the books of accounts.
(ii) These statements are prepared for the organisation as a whole
(iii) Information is presented in a meaningful way by grouping items of similar nature such as fixed assets and current assets.
(iv) Financial statements involve personal judgement in certain cases
(v) Financial statements are prepared based on historical cost.

The values highlighted are
(i) Social responsibility towards society.
(ii) Sensitivity towards cleaner environment

The value involved are Respect for women and women empowerment.

Values shown by the firm are
i. Responsibility :
Firm has shown responsibility towards senior citizens by giving them their dues.
ii. Compassion:
Partners have shown compassion towards senior citizens by fulfilling their duties towards senior citizens .

Values being affected are
(i) Reliablility: Value of reliability is affected as accounts maintained on single entry system are less reliable as they are prepared from incomplete records.
(ii) Accuracy: Value of arithmetical accuracy is affected, as in single entry system, trial balance cannot be prepared which proves arithmetical accuracy of accounts.

Calculation of Profit

Values involved are
(i) Violating child labour act by employing 10 year old boy.
(ii) By providing good quality product she is promoting the welfare and health of society
(iii) By charging reasonable prices she is not indulged in profiteering.

(i) Under this method, only one capital account is maintained for each partner.
(ii) The capital is changing from period to period.
(iii) This capital account shows always a credit balance
(iv) All adjustment relating to partners are recorded directly in the capital account.

(i) In sole proprietorship, the profit or loss in the profit and loss account is transferred directly to the sole proprietor's capital account. In partnership, profit and loss appropriation account is prepared to which net profit or loss from profit and to which net profit or loss from profit and loss account is transferred.
(ii) In the profit and loss appropriation account, adjustments for interest on capital, interest on drawings, salary and other remuneration due to the partners are shown. Finally, the balance in the appropriation account is transferred to the partner's capital account in the profit sharing ratio.
(iii) Capital account balance of the sole proprietor alone is shown in the balance sheet of sole proprietorship. The balance sheet of a partnership concern shows the balances in the individual capital accounts (an current accounts) of the partners.

The factors affecting the value of goodwill of the firm are
(i) Nature of business
(ii) Efficiently of management
The values which the firm is trying to propagate are
(i) Promoting education among the students of below poverty line.
(ii) Providing quality services to customers resulting in customer satisfaction

The factors affecting the goodwill of the firm are
(i) Location
(ii) Market situation
The values which the firm is trying to propagate are
(i) Sensitivity towards people belonging to lower income group.
(ii) Working towards customer satisfaction

Goodwill may be classified into acquired goodwill or self-generated goodwill.
(i) Acquired or purchased goodwill:
(1) Goodwill acquired by making payment in cash or kind is called acquired or purchased goodwill.
(2) The excess of purchase consideration over the value of net assets acquired is treated as acquired goodwill.
(ii) Self - generated goodwill:
It is the goodwill which is self generated by a firm based on features of the business such as favourable location, local customers, etc. Such self-generated goodwill cannot be recorded in the books of accounts.

Following are the circumstances that require valuation of goodwill of partnership firms in order to protects the rights of the partners
(i) When there is a change in the profit sharing ratio
(ii) When a new partner is admitted into a firm
(iii) When an existing partner retires from the firm or when a partner dies.
(iv) When a partnership firm is dissolved

The nature of goodwill can be described as follows:
(i) Goodwill is an intangible fixed asset. It cannot be seen or touched.
(ii) It has a definite value depending on the profitability of the business enterprise.
(iii) It cannot be separated from the business
(iv) It helps in earning more profit and attracts more customers
(v) It can be purchased or sold only when the business is purchased or sold in full or in part