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12th | Accounting Ratio | Question No. 41 To 45 | Ts Grewal Solution 2023-2024

Question 41:


Balance Sheet had the following amounts as at 31st March, 2021:

 

 `

 

 

 `

10% Preference Share Capital

5,00,000

 

Current Assets

12,00,000

Equity Share Capital

15,00,000

 

Current Liabilities

8,00,000

Securities Premium Reserve

1,00,000

 

Investments (in other companies)

2,00,000

Reserves and Surplus

4,00,000

 

Fixed Assets-Cost

60,00,000

Long-term Loan from IDBI @ 9%

30,00,000

 

Depreciation Written off

14,00,000

Calculate ratios indicating the Long-term and the Short-term financial position of the company.

Answer:


(i) Debt-Equity Ratio is an indicator of Long-term financial health. It shows the proportion of Long-term loan in comparison of shareholders’ Funds.

Debt-Equity Ratio = Long Term Debts/Equity

Debt = Loan from IDBI @ 9% = 30,00,000

Equity = 10% Preference Share Capital + Equity Share Capital + Reserves & Surplus

= 5,00,000 + 15,00,000 + 4,00,000 = 24,00,000

Debt-Equity Ratio = 30,00,000/24,00,000 = 1.25:1

(ii) Current Ratio is an indicator of short-term financial portion. It shows the proportion of Current Assets in comparison of Current Liabilities.
Current Ratio = Current Assets/Current Liabilities

Current Assets = 12,00,000

Current Liabilities = 8,00,000

Current Ratio = 12,00,000/8,00,000 = 1.5:1

Note: In the above question, Securities Premium Reserve is not considered while computing Equity because it is already included in the amount of Reserves and Surplus.

Question 42:


Calculate Debt to Equity Ratio from the following information:

 

 `

 

 

 `

Fixed Assets (Gross)

8,40,000

 

Current Assets

3,50,000

Accumulated Depreciation

1,40,000

 

Current Liabilities

2,80,000

Non-current Investments

14,000

 

10% Long-term Borrowings

4,20,000

Long-term Loans and Advances

56,000

 

Long-term Provisions

1,40,000

 

Answer:


Debt

=

Long Term Borrowings+Long Term Provisions        

 

=

4,20,000+1,40,000 =  ` 5,60,000

 

 

 

Equity

=

Total Assets - Total Debts           

 

=

(8,40,000 -1,40,000+14,000+56,000+3,50,000) - (4,20,000 -1,40,000 -2,80,000)=  ` 2,80,000

 

 

 

Debt to Equity Ratio

=

Debt/Equity                                  

 

=

5,60,000/2,80,000=2:1

 

Question 43: From the following information, calculate Debt to Equity Ratio: Total Debts `6,00,000; Current Liabilities `2,00,000 and Capital Employed `6,00,000.


Answer:


Debt to Equity Ratio = Debt÷Equity Ratio

Debt to Equity Ratio = 4,00,000/2,00,000=2/1

Debt to Equity Ratio = 2:1

Working note:

Debt (Non- Current Liabilities)= Total Debt- Current Liabilities

4,00,000= 6,00,000 - 2,00,000

Equity= Capital Employed - Non- Current Liabilities

2,00,000= 6,00,000 - 4,00,000

 

Question 44: Calculate Debt to Equity Ratio: Total Assets `14,00,000, Total Debt `12,00,000; Capital Employed `10,00,000.


Answer:


Debt to Equity Ratio = Debt÷Equity Ratio

Debt to Equity Ratio = 8,00,000/2,00,000=4/1

Debt to Equity Ratio = 4:1

Working note:

Total Assets= Total Liabilities

14,00,000=14,00,000

Equity= Total Liabilities- Total Debt

2,00,000=14,00,000-12,00,000

Debt (Non- Current Liabilities)= Capital Employed- Equity

8,00,000=10,00,000-2,00,000

Question 45:


Capital Employed  `8,00,000; Shareholders' Funds  `2,00,000. Calculate Debt to Equity Ratio.

Answer:


Shareholders’ Funds = 2,00,000

Capital Employed = 8,00,000

Long- Term Debts = Capital Employed − Shareholders’ Funds

= 8,00,000 − 2,00,000 = 6,00,000

Debt equity ratio= Long-term Debt /equity=6,00,000/2,00,000=3:1

 

Ts Grewal Solution 2023-2024

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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

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