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12th | Accounting Ratio | Question No. 181 and 182 | Ts Grewal Solution 2023-2024

Question 181:

From the following information related to Naveen Ltd., calculate (a) Return on Investment and (b) Total Assets to Debt Ratio:
 Information: Fixed Assets  ` 75,00,000; Current Assets  ` 40,00,000; Current Liabilities  ` 27,00,000; 12% Debentures  ` 80,00,000 and Net Profit before Interest, Tax and Dividend  ` 14,50,000.

 Answer:

 1) Return on Investment

 Return on Investment = Net profit  Before Interest, Tax and dividend ×100/ Capital Employed

 Net profit  Before Interest, Tax and dividend=14,50,000
 Capital employed= Fixed Assets + Current Assets+ Current Liabilities
                                    =75,00,000+40,00,000+27,00,000

                                    =88,00,000

 Return on Investment =14,50,000×100/88,00,000

                                    =16.48%

 2) Total Assets to Debt to Ratio
 Total Assets to Debt Ratio = Total Assets/Debt

Total Assets = Fixed Assets + Current Assets                   

= ` (75,00,000 + 40,00,000)                   

= ` 1,15,00,000

Debt =  ` 80,00,000

Total Assets to Debt Ratio = 1,15,00,000/80,00,000 

= 1.44:1

Question 182: From the following information, calculate:

(i) Gross Profit Ratio;

(ii) Working Capital Turnover Ratio; and

(iii) Proprietary Ratio.

Particulars

Rs.

Particulars

Rs.

Paid-up Capital

8,00,000

Current Assets

5,00,000

Credit Sales

3,00,000

Current Liabilities

2,90,000

9% Debentures

3,40,000

Cash Sales: 75% of Credit Sales

 

Cost of Goods Sold

6,80,000

Net Profit for the year

1,55,000

 

Answer:

(i) Gross Profit Ratio

 

Gross Profit Ratio = Gross Profit Ratio×100/Revenue from Operations

Gross Profit Ratio = -1,55,000×100/5,25,000

Gross Profit Ratio = -29.52%

 

Working Notes:

Gross Profit = Revenue form operation - Cost of Goods Sold

-1,55,000 = 5,25,000 - 6,80,000

 

Revenue form operation = Credit Sales+ Cash Sales: 75% of Credit Sales

Revenue form operation = 3,00,000 + 2,25,000=5,25,000

 

(ii) Working Capital Turnover Ratio

Working Capital Turnover Ratio = Revenue from Operations/Working Capital

Working Capital Turnover Ratio = 5,25,000/Working Capital

Working Capital Turnover Ratio = 5,25,000/2,10,000= 2.5 Times

Working Notes:

Working Capital = Current Assets + Current Liabilities

Working Capital = 5,00,000 + 2,90,000 = 2,10,000

(iii) Proprietary Ratio

 

Proprietary Ratio = Proprietary’s fund×100/ Total Assets

Proprietary Ratio = 9,55,000×100/15,85,000

Proprietary Ratio = 60.25%

 

Working Notes:

Proprietary’s fund = Paid-up Capital + Net Profit for the year

Proprietary’s fund = 8,00,000+1,55,000=9,55,000

Total Assets = Total Liabilities

Total Assets = Paid-up Capital+9% Debentures+ Net Profit for the years+Current Liabilities

Total Assets = 8,00,000 + 3,40,000+1,55,000+2,90,000

Total Assets = 15,85,000

 

Ts Grewal Solution 2023-2024

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Class 12 / Volume – I

Chapter 3 – Accounting Ratio

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