M Mehrotra

To answer this question, we need to take a step back and just classify the elements of "Debt Equity Ratio" & "Current Ratio".

"Debt-Equity ratio" is relationship between Debts & Own capital (does not include any current liabilities) on the other side the current ratio is showing relationship between Current Assets vis-a-vis Current Liabilities.

Every transaction that we record in books of accounts impact two accounts and if transactions impact the accounts lying in above categories it will certainly impact the ratio as well.

Let’s see,

Settlement of Long Term Liabilities from issue of Share Capital decreases the Debt Equity ratio being debt reduced & Capital increased however the amount came in bank via issue of capital got paid to long term liabilities so no impact on current ratio.

The intenet of this question is to judge the classification abilities of student. To start with we need to focus on primary naming convention & primary business (most of the time name is associated with business type). Having said this background the answers are as follows:

i) The company is in Advertising services business and works for promoting/ advertising its clients products distributing through courier as samples.

ii) The service that company is using to send out letters & Parcels is named as "Courier Service". Courier service will also help company to make a personal interaction with the consumers of samples and fast feedback receiving process.

Sukhdev is a Wholeseller/ Stockist and he keeps selling to the Retailers like Sulekha, Sharda & Aayat.

As a Wholeseller Sukhdev can offer following services to the clients like Sulekha:

i) The retailer need not carry stock of large variety of products to meet the demand of his customers.

ii) Wholesalers relieve the retailers of the necessity of placing orders to different manufacturers. Thus, the number of the sources of supply for the variety of goods is reduced to the minimum; hence buying problem is considerably simplified.

iii) Wholesalers enable retailers to obtain supplies more quickly than they could by placing orders directly to different manufacturers.

iv) The wholesaler provides a greater opportunity for a retailer to order a number of products at the same time so that transport and packing costs are incurred in respect of a single consignment in place of a number of consignments. This leads to savings in transport and packing costs.

v) Wholesalers specialize in a particular line of products. Therefore, he has an expert knowledge of the market conditions relating to such products. He passes on his knowledge to the retailer who cannot posses such knowledge as he deals in a large number of products of different varieties.

vi) Wholesalers help retailers to take advantage of favourable fluctuations in prices.

vii) By enabling retailers to replenish their stocks in smaller quantities, wholesalers enable them to operate their business with lesser amount of capital and derive the benefits of economy in space, and more economical sue of capital.

viii) Wholesalers provide financial assistance of material significance to retailers. This is done by allowing credit to the retailers purchasing goods from them. This in effect helps the retailer to manage his business with smaller amount of working capital.