What is the amount of current asset? (CAIIB Solved Questions)

Question: Debt Equity Ratio is 3:1,the amount of Total assets Rs.20 lac, Current ratio is 3:2 and owned funds Rs.3 lac. What is the amount of current asset?

Debt Equity Ratio = Long Term Sources / Net worth/Equity = 3:1
Net worth/Equity= Owned Fund = 3Lac
Hence Long Term Source = 3/1 × 3Lac = 9Lac
Accounting Equation State that Total Liabilities + Equity = Total Assets
Total Assets = 20 Lac (Given)
Total Liabilities = Current Liabilities + Long Term Sources
Hence, Current Liabilities + Long Term Sources + Equity = Total Assets
Current Liabilities + 9Lac + 3lac = 20 Lac
Current Liabilities = 8Lac
Current Ratio = Current Assets/Current Liabilities
Current Ratio = 3/2
Current Assets = 3/2 × Current Liabilities
Current Assets = 3/2 × 8 = 12Lac

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Weaker Sections & Priority sector Lending - Commercial Banks

Weaker Sections

Priority sector loans to the following borrowers will be considered under Weaker Sections category:-

(a) Small and marginal farmers;

(b) Artisans, village and cottage industries where individual credit limits do not exceed ` 50,000;

(c) Beneficiaries of Swarnjayanti Gram Swarozgar Yojana (SGSY), now National Rural Livelihood Mission (NRLM);

(d) Scheduled Castes and Scheduled Tribes;

(e) Beneficiaries of Differential Rate of Interest (DRI) scheme;

(f) Beneficiaries under Swarna Jayanti Shahari Rozgar Yojana (SJSRY);

(g) Beneficiaries under the Scheme for Rehabilitation of Manual Scavengers (SRMS);

(h) Loans to Self Help Groups;

(i) Loans to distressed farmers indebted to non-institutional lenders;

(j) Loans to distressed persons other than farmers not exceeding ` 50,000 per borrower  to prepay their debt to non-institutional lenders;

(k) Loans to individual women beneficiaries upto ` 50,000 per borrower;

(l) Loans sanctioned under (a) to (k) above to persons from minority communities as may be notified by Government of India from time to time.

In States, where one of the minority communities notified is, in fact, in majority, item (l) will cover only the other notified minorities. These States/Union Territories are Jammu & Kashmir, Punjab, Meghalaya, Mizoram, Nagaland and Lakshadweep.

 

As per RBI Guidelines for Domestic commercial banks / Foreign banks with 20 and above branches:

Total Priority Sector

40 percent of Adjusted Net Bank Credit [ANBC] or credit equivalent amount of Off-Balance Sheet Exposure, whichever is higher.

Advances to Weaker Sections

10 percent of ANBC or credit equivalent amount of Off-Balance Sheet Exposure, whichever is higher. i.e. 25% of Total Priority Sector

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Net Worth Calculations & Solved Example ( CAIIB)

Net worth in simple words refers to net assets which imply total assets less total liabilities of the company. In order to calculate net worth of a company one should add Equity share capital, Preference share capital, Reserves and Surplus available with the firm and deduct from this all fictitious assets or intangible items like miscellaneous expenditure, preliminary expenses and so on.

Debts are not considered in the calculation of net worth of the company. It is also called owner’s equity as it does not include outsider’s debt like debentures, long term loan, bank loan etc


Example:

Given a firm has the following financial figures in its balance sheet, what is its net worth?

• Capital: Rs 12 lac
• Reserve: Rs 4 lac
• Unsecured loan: Rs 5 lac
• Current assets: Rs 16 lac
• Pre operative expenses: Rs 2 lac

Hence: Net Worth = Capital + Reserve - Pre-operative Expenses
                              = 12 Lac + 4Lac − 2Lac
            Net Worth = 14Lac

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