Question 71:
From the following information, calculate Interest Coverage Ratio:
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|
` |
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10,000 Equity Shares of `10 each |
1,00,000 |
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8% Preference Shares |
70,000 |
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10% Debentures |
50,000 |
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Long-term Loans from Bank |
50,000 |
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Interest on Long-term Loans from Bank |
5,000 |
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Profit after Tax |
75,000 |
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Tax |
9,000 |
Answer:
Interest on 10% debentures=50,000×10/1000=5,000
Profit before Interest and Tax = Profit after Tax + Tax + Interest on Debentures + Interest on Long-term Loans from Bank
Profit before Interest and Tax = 75,000 + 9,000 + 5,000 + 5,000
Profit before Interest and Tax = 94,000
Total Interest Amount = Interest on Debentures + Interest on Long-term loans from Bank
Total Interest Amount = 5,000 + 5,000
Total Interest Amount = 10,000
Interest Coverage Ratio = Net Profit before Interest and Tax/Interest
Interest Coverage Ratio = 94,000/10,000
Interest Coverage Ratio = 9.4 times
Debt to Capital Employed Ratio
Question 72: From the following information, calculate Debt to Capital Employed Ratio:
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` |
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Shareholders' Funds |
24,00,000 |
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Long-term Borrowings (9% Debentures) |
12,00,000 |
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Current Liabilities |
2,00,000 |
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Non-current Assets |
28,00,000 |
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Current Assets |
10,00,000 |
Answer:
Debt to Capital Employed Ratio= Debt ÷ Capital Employed
Debt to Capital Employed Ratio= 12,00,000 ÷ 36,00,000
Debt to Capital Employed Ratio= 0.33/1
Working note:
Capital Employed = Shareholders' Funds + Long-term Borrowings (9% Debentures)
Capital Employed = 24,00,000+12,00,000=36,00,000
Question 73: From the following information, calculate Debt to Capital Employed Ratio:
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` |
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` |
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Capital Employed |
87,00,000 |
Cash and Cash Equivalents |
7,20,000 |
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Investments |
4,80,000 |
Equity Share Capital |
45,00,000 |
|
Machinery |
14,00,000 |
8% Debentures |
36,00,000 |
|
Trade Receivables |
8,00,000 |
Capital Reserve |
6,80,000 |
Surplus, ie., Balance in Statement of Profit & Loss: (`1,00,000).
Answer:
Debt to Capital Employed Ratio= Debt ÷ Capital Employed
Debt to Capital Employed Ratio= 36,00,000 ÷ 87,00,000
Debt to Capital Employed Ratio= 0.41/1
Question 74: From the following, calculate 'Debt to Capital Employed Ratio':
9% Debentures - `2,00,000
8% Public Deposits - `5,00,000
Long-term Provisions - `2,00,000
Equity Share Capital - `8,00,000
Reserves and Surplus - `5,00,000
Answer:
Debt to Capital Employed Ratio= Debt ÷ Capital Employed
Debt to Capital Employed Ratio= 2,00,000 ÷ 15,00,000
Debt to Capital Employed Ratio= 0.41/1
Working note:
Debt= 9% Debentures - `2,00,000
Equity= 9% Debentures (`2,00,000) + Equity Share Capital (`8,00,000) + Reserves and Surplus (`5,00,000)=15,00,000
Question 75: Calculate Debt to Capital Employed Ratio from the following information:
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|
` |
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Shareholders’ Funds |
|
50,00,000 |
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Non-current Liabilities: |
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|
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Long-term Borrowings |
20,00,000 |
|
|
Long-term Provisions |
17,50,000 |
37,50,000 |
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Non-current Assets: |
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|
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Property, plant and Equipment and Intangible Assets |
90,00,000 |
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Non-current Investments |
12,50,000 |
1,02,50,000 |
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Current Assets |
|
23,75,000 |
Answer:
Debt to Capital Employed Ratio= Debt ÷ Capital Employed
Debt to Capital Employed Ratio= 37,50,000÷ 87,50,000
Debt to Capital Employed Ratio= 0.428/1
Debt to Capital Employed Ratio= 0.43:1
Working note:
Debt = Long-term Borrowings + Long-term Provisions
37,50,000=20,00,000+17,50,000
Capital Employed= Debt+ Shareholders’ Funds
87,50,000=37,50,000+50,00,000
Ts Grewal Solution 2023-2024
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Class 12 / Volume – I
Chapter 3 – Accounting Ratio