Question 171:
Calculate Revenue from Operations of BN Ltd. from the following information:
Current Assets 8,00,000
Quick Ratio is 1.5:1
Current Ratio is 2:1.
Inventory Turnover Ratio is 6 times.
Goods were sold at a profit of 25% on cost.
(CBSE 2019)
Answer:
Current Ratio = Current Assets/ Current Liabilities
2:1 = 8,00,000/ Current Liabilities
Current Liabilities= 8,00,000/2=4,00,000
Quick Assets= 4,00,000×1.5=6,00,000
Working Capital = Current Assets - Current Liabilities
Working Capital = 8,00,000 – 4,00,000
Working Capital = 4,00,000
Inventory= Current Assets – Quick Assets
Inventory= 8,00,000 – 6,00,000
Inventory= 2,00,000
Inventory Turnover Ratio= Cost of Revenue from operation/Average Inventory
Cost of Revenue from operation = Inventory× Inventory Turnover Ratio
Cost of Revenue from operation = 2,00,000 × 6
Cost of Revenue from operation = 12,00,000
Profit of 25% on cost
therefore,
it is assumed that
Cost is equal to 100%
|
Revenue |
= |
Cost |
+ Profit |
|
125 |
= |
100 |
+25 |
Hence,
Revenue= 12,00,000×125/100=15,00,000
Question 172:
Opening Inventory `80,000; Purchases `4,30,900; Direct Expenses `4,000; Closing Inventory `1,60,000; Administrative Expenses `21,100; Selling and Distribution Expenses `40,000; Revenue from Operations, i.e., Net Sales `10,00,000. Calculate Inventory Turnover Ratio; Gross Profit Ratio; and Opening Ratio.
Answer:
(i)
Opening Inventory = 80,000
Closing Inventory = 1,60,000
Cost of Goods Sold = Opening Inventory + Purchases + Direct Expenses − Closing Inventory
= 80,000 + 4,30,900 + 4,000 − 1,60,000
= 3,54,900
Average Inventory= Opening Inventory+ Closing Inventory/2
=80,000+90,000/2
=1,20,000
Inventory Turnover Ratio= Cost of Goods Sold/ Average Inventory
=3,54,000/1,20,000
=2.96 Times
(ii)
Sales = 10,00,000
Gross Profit = Net Sales − Cost of Goods Sold
= 10,00,000 − 3,54,900 = 6,45,100
Gross Profit Ratio= Gross profit ×100/Net Sales
= 645000×100/10,00,000
=64.51%
(iii)
Operating Expenses = Administration Expenses + Selling and Distribution Expenses
= 21,100 + 40,000 = 61,100
Operating Cost = Cost of Goods Sold+ Operating Expenses
=3,54,900+61,100=4,16,000
Operating Ratio= Operating Cost/ Net Sales ×100
=4,16,000/10,00,000× 100
= 41.6%
Question 173:
Following information is given about a company:
|
|
` |
|
|
` |
|
Revenue From Operations, i.e., Net Sales Gross Profit |
1,50,000 |
|
Opening Inventory |
29,000 |
|
Cost of Revenue From Operations |
30,000 |
|
Closing Inventory |
31,000 |
|
(Cost of Goods Sold) |
1,20,000 |
|
Debtors |
16,000 |
From the above information, calculate following ratios:
(i) Gross Profit Ratio,
(ii) Inventory Turnover Ratio, and
(iii) Trade Receivables Turnover Ratio.
Answer:
(i)
Sales = 1,50,000
Gross Profit = 30,000
Gross Profit Ratio= Gross profit ×100/Net Sales
= 30,000×100/1,50,000
= 20%
(ii)
Opening Inventory = 29,000
Closing Inventory = 31,000
Average Inventory= Opening Inventory+ Closing Inventory/2
=29,000+30,000/2
=30,000
Cost of Goods Sold = 1,20,000
Inventory tunover ratio= Cost of goods sold / Average Inventory
= 1,20,000/30,000
= 4 Times
(iii)
Trade receivable turnover ratio= Net Credit sales/ Average Trade receivables
Trade receivable turnover ratio= 1,50,000/16,000
= 9.4 Times
Question 174: From the following information, calculate:
(i) Return on Investment Ratio.
(ii) Net Assets Turnover Ratio.
|
Particulars |
` |
|
Net Profit after Interest and Tax |
2,40,000 |
|
Tax |
1,60,000 |
|
Net Fixed Assets: Property, Plant and Equipment and intangible Assets |
10,00,000 |
|
Non-current Investments (Non-trade) |
1,00,000 |
|
Equity Share Capital (Face Value 10 per share) |
5,00,000 |
|
15% Preference Share Capital |
1,00,000 |
|
Reserves and Surplus (including surplus of the year under consideration) |
2,00,000 |
|
10% Debentures |
4,00,000 |
|
Revenue from Operations |
24,00,000 |
Answer:
(i) Return on Investment Ratio
Return on Capital Employed = Profit Before interest, tax and dividend/ Capital Employed×100
Return on Capital Employed (ROI) = 4,40,000/12,00,000×100=36.67%
Working Note:
Interest =4,00,000×15/100=60,000
Profit Before interest= Profit after interest + Interest
Profit Before interest and tax=2,40,000+1,60,000+40,000=4,40,000
Capital Employed= Equity Share Capital +15% Preference Share Capital +Reserves and Surplus+10% Debentures
Capital Employed= 5,00,000+1,00,000+2,00,000+4,00,000=12,00,000
(ii) Net Assets Turnover Ratio
Net Assets Turnover Ratio = Revenue from Operations/ Fixed Assets (Net)
Net Assets Turnover Ratio = 24,00,000/12,00,000
Net Assets Turnover Ratio = 2 Times
Question 175:
From the following information obtained from the books of Kamal Ltd., calculate (i) Gross Profit Ratio and (ii) Net Profit Ratio:
|
|
` |
|
Revenue from Operations |
2,50,000 |
|
Purchases |
1,05,000 |
|
Carriage Inwards |
4,000 |
|
Salaries |
30,000 |
|
Decrease in Inventory |
15,000 |
|
Return Outwards |
5,000 |
|
Wages |
18,000 |
(CBSE 2020)
Answer:
(i) Gross Profit= Revenue- Net Purchase- Carriage Inwards- Wages- Decrease in Inventory
Gross Profit= 2,50,000- (1,05,000-5,000)- 4,0000 – 18,000-15,000
Gross Profit=1,13,500
Gross Profit=1,13,500×100/2,50,000 =45.20%
(ii) Net Profit= Gross Profit –Salaries
Net Profit= 1,13,000 – 30,000
Net Profit= 83,000
Net Profit=83,500×100/2,50,000 =33.20%
Ts Grewal Solution 2024-2025
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Class 12 / Volume – III
Chapter 3 – Accounting Ratio