commercemine

12th | Accounting Ratio | Question No. 36 To 40 | Ts Grewal Solution 2023-2024

Question 36:

From the following calculate: (i) Current Ratio; and (ii) Quick Ratio:

 

`

 

 

`

Total Debt

12,00,000

 

Long-term Borrowings

4,00,000

Total Assets

16,00,000

 

Long-term Provisions

4,00,000

Fixed Assets (Tangible)

6,00,000

 

Inventories

1,90,000

Non-current Investment

1,00,000

 

Prepaid Expenses

10,000

Long-term Loans and Advances

1,00,000

 

 

 

Answer:

(i)                 Current ratio

Current RatioCurrent Assets=Total Assets-Fixed Assets-Non-Current Investment - Long term Loans and Advances                       

=16,00,000-6,00,000-1,00,000-1,00,000= ` 8,00,000

 

Current Liabilities=Total Debt - Non-Current Liabilities                             

=12,00,000-4,00,000-4,00,000= ` 4,00,000

 

Current Ratio=Current AssetsCurrent Liabilities                     

=8,00,000/4,00,000=2:1

 

(ii)               ​ Quick Ratio 

Quick Assets=Current Assets-Stock-Prepaid Expenses                   

=8,00,000-1,90,000−10,000= ` 6,00,000

Quick Ratio=Quick Assets/Current Liabilities                     

=6,00,000/4,00,000=1.5:1

 

Question 37:

Following is the Balance Sheet of Crescent Chemical Works Limited as at 31st March, 2021:

Particulars

Note
No.

 `

I. EQUITY AND LIABILITIES :
1. Shareholder's Funds :

 

 

(a) Share Capital

 

70,000

(b) Reserves and Surplus

 

35,000

 

 

 

2. Non-Current Liabilities :

 

 

Long-term Borrowings

 

25,000

 

 

 

3. Current Liabilities :

 

 

(a) Short-term Borrowings

 

3,000

(b) Trade Payables (Creditors)

 

13,000

(b) Short-term Provisions: Provision for Tax

 

4,000

Total

 

1,50,000

II. ASSETS :

 

 

1. Non-Current Assets

 

 

(a) Fixed Assets (Tangible)

 

45,000

(b) Non-current Investments

 

5,000

 

 

 

2. Current Assets

 

 

(a) Inventories (Stock)

 

50,000

(b) Trade Receivables (Debtors)

 

30,000

(c) Cash and Cash Equivalents

 

20,000

Total

 

1,50,000

Compute Current Ratio and Liquid Ratio 

Answer:

Current Assets = Inventory + Trade Receivables + Cash and Cash Equivalents

= 50,000 + 30,000 + 20,000 = 1,00,000

Current Liabilities = Short-term Borrowings + Trade Payables + Provision for Tax

= 3,000 + 13,000 + 4,000 = 20,000

Quick Assets = Trade Receivables + Cash and Cash Equivalents

= 30,000 + 20,000 = 50,000

Current ratio= Current Assets/ Current liabilities=1,00,000/20,000=5:1

Quick ratio= Liquid Assets/ Current liabilities=50,000/20,000=2.5:1

 

Comments:

1. Ideal Current Ratio for a business is considered to be 2:1. But in this case the ratio is quite high i.e. 5:1. This may be due to the following reasons:

(i) Blockage of Funds in Stock

(ii) High Amount outstanding from Debtors

(iii)             Huge Cash and Bank Balances

 

2. Ideal Quick Ratio of a business is supposed to be 1:1. This implies that Liquid Assets should be equal to the Current Liabilities. But in the given case Quick Ratio is 2.5 : 1 which indicates that the Liquid Assets are quite high in comparison to the Current Liabilities.

 

Question 38:

Total Assets  ` 2,60,000; Total Debts  ` 1,80,000; Current Liabilities  ` 20,000. Calculate Debt to Equity Ratio. 

Answer:

Total Debts = 1,80,000

Current Liabilities = 20,000

Long-term Debts = Total Debts − Current Liabilities

= 1,80,000 − 20,000 = 1,60,000

Equity = Total Assets − Total Liabilities

= 2,60,000 − 1,80,000 = 80,000

Debt equity ratio= Long-term Debt /equity=1,60,000/80,000=2:1

 

Question 39:

Calculate Debt to Equity Ratio: Equity Share Capital  ` 5,00,000; General Reserve  ` 90,000; Accumulated Profits  ` 50,000; 10% Debentures  ` 1,30,000; Current Liabilities  ` 1,00,000.

Answer:

Equity = Equity Share Capital + General Reserve + Accumulated Profits

= 5,00,000 + 90,000 + 50,000 = 6,40,000

Debt = 10% Debentures = 1,30,000

Debt equity ratio= Debt /equity=1,30,000/6,40,000=0.203:1

 

Question 40:

From the following information, calculate Debt to Equity Ratio: 

 

`

10,000 Equity Shares of ` 10 each fully paid

2,00,000

5,000; 9% Preference Shares of ` 10 each fully paid

1,00,000

General Reserve

90,000

Surplus, i.e., Balance in Statement of Profit & Loss

40,000

10% Debentures

1,50,000

Current Liabilities

1,00,000

Note: Either Number of shares or Price of par share is wrongly printed in the book, either of both must have been changed.

Answer:

Long-Term Debt = Debentures =  ` 1,50,000
Shareholder’s Funds = Equity Share Capital + Preference Share Capital + General Reserve + Surplus
=  ` 2,00,000 +  ` 1,00,000 +  ` 90,000 +  `40,000 =  ` 4,30,000

Debt-equity ratio= Long-Term Debt /Equity = 1,50,000/4,30,000 = 0.35:1

 

Ts Grewal Solution 2023-2024

Click below for more Questions

Class 12 / Volume – I

Chapter 3 – Accounting Ratio

Question No. 1 To 5

Question No. 6 To 10

Question No. 11 To 15

Question No. 16 To 20

Question No. 21 To 25

Question No. 26 To 30

Question No. 31 To 35

Question No. 36 To 40

Question No. 41 To 45

Question No. 46 To 50

Question No. 51 To 55

Question No. 56 To 60

Question No. 61 To 65

Question No. 66 To 70

Question No. 71 To 75

Question No. 76 To 80

Question No. 81 To 85

Question No. 86 To 90

Question No. 91 To 95

Question No. 96 To 100

Question No. 101 To 105

Question No. 106 To 110

Question No. 111 To 115

Question No. 116 To 120

Question No. 121 To 125

Question No. 126 To 130

Question No. 131 To 135

Question No. 136 To 140

Question No. 141 To 145

Question No. 146 To 150

Question No. 151 To 155

Question No. 156 To 160

Question No. 161 To 165

Question No. 166 To 170

Question No. 171 To 175

Question No. 176 To 180

Question No. 181 And 182