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12th | Accounting Ratio | Question No. 76 To 80 | Ts Grewal Solution 2023-2024

Question 76: Calculate Debt to Capital Employed Ratio from the following information:

Total Debts ` 60,00,000; Current Assets ` 25,00,000; Non-Current Assets ` 95,00,000; Working Capital ` 5,00,000.

 

Answer:

Debt to Capital Employed Ratio= Debt ÷ Capital Employed

Debt to Capital Employed Ratio= 40,00,000÷ 100,00,000

Debt to Capital Employed Ratio= 0.4:1

 

Working note:

Total Assets = Non-Current Assets- Current Assets

1,20,00,000 = 25,00,000+ 95,00,000

 

Total Assets= Total Liabilities

Total Liabilities = 1,20,00,000

 

Equity= Total Liabilities- Total Debts

60,00,000 = 1,20,00,000- 60,00,000

 

Current Liabilities = Current Assets- Working Capital

20,00,000 = 25,00,000-5,00,000

 

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

40,00,000=60,00,000-20,00,000

 

Capital Employed =Debt+ Equity

1,00,00,000 = 40,00,000+60,00,000

 

Question 77: From the following, calculate Debt to Capital Employed Ratio:

10% Preference Share Capital ` 5,00,000; Equity Share Capital ` 15,00,000; Securities Premium ` 1,00,000: Reserves and Surplus ` 2,00,000: 99% Loan from IDBI ` 30,00,000.

Answer:

Debt to Capital Employed Ratio= Debt ÷ Capital Employed

Debt to Capital Employed Ratio= 30,00,000÷ 52,00,000

Debt to Capital Employed Ratio= 0.576÷1

Debt to Capital Employed Ratio= 0.58:1

 

Working note:

(i)

Capital Employed = 10% Preference Share Capital +Equity Share Capital + Reserves and Surplus + 99% Loan from IDBI

Capital Employed = 5,00,000+ 15,00,000+ 2,00,000+30,00,000.

Capital Employed = 5,00,000+ 15,00,000+ 2,00,000+30,00,000.

Capital Employed =52,00,000

 

(ii) Debt=99% Loan from IDBI ` 30,00,000.

 

Question 78: From the following Balance Sheet of Varun Ltd. as at 31st March, 2023, calculate Debt to Capital Employed Ratio

Particulars

Note No.

Rs.

I. EQUITY AND LIABILITIES

 

 

1. Shareholders' Funds

 

 

(a) Share Capital

 

20,00,000

(b) Reserves and Surplus

 

11,00,000

2. Non-Current Liabilities

 

 

Long-term Borrowings

 

15,00,000

3. Current Liabilities

 

 

(a) Short-term Borrowings

 

5,00,000

(b) Trade Payables

 

4,00,000

Total

 

55,00,000

II. ASSETS

 

 

1. Non-Current Assets

 

 

Property, Plant and Equipment and Intangible Assets:

 

 

(a) Property, Plant and Equipment

 

36,00,000

(b) Non-current Investments

 

5,00,000

2. Current Assets

 

 

(a) Current Investments

 

4,50,000

(b) Inventories

 

3,00,000

(c) Cash and Cash Equivalents

 

6,50,000

Total

 

55,00,000

 

Answer:

Debt to Capital Employed Ratio = Debt/Capital Employed

Debt to Capital Employed Ratio = 15,00,000/46,00,000

Working Notes:

Capital employed = Share Capital +Reserves and Surplus + Long-term Borrowings

Capital employed = 20,00,000+11,00,000+15,00,000

Capital employed = 46,00,000

Capital employed = 0.326/1

Capital employed = 0.33/1

 

Question 79: Debt to Capital Employed Ratio of a company is 0.4: 1. State giving reasons, which of the following will Improve, reduce or not change the ratio?

(i) Sale of Machinery at a loss of ` 50,000.

(ii) Purchase of Stock-in-Trade on credit of two months for ` 80,000.

(iii) Conversion of Debentures into Equity Shares of ` 5,00,000.

(iv) Purchase of Fixed Assets for ` 4,00,000 on a long-term deferred payment basis.

Answer:

Debt to Capital Employed Ratio of a company is 0.4: 1

(i) Sale of Machinery at a loss of ` 50,000.

Answer: Ratio will improve , Since this will decrease only Equity therefore only capital employed will decrease

(ii) Purchase of Stock-in-Trade on credit of two months for ` 80,000.

Answer: Ratio will not change, this will effect stock and creditor for are of current assets and liabilities

(iii) Conversion of Debentures into Equity Shares of ` 5,00,000.

Answer: suppose, Debt 40,00,000; and Capital Employed 1,00,00,000, above transaction will decrease debt and will increase Capital Employed as below;

40,00,000-5,00,000/1,00,00,000+5,00,000

3,50,000/1,05,00,000=0.33 (this will reduce)

(iv) Purchase of Fixed Assets for ` 4,00,000 on a long-term deferred payment basis.

Answer: this will increase both sides equally then ratio will improve

 

Inventory Turnover Ratio

Question 80:

From the following details, calculate Inventory Turnover Ratio:

 

 `

Cost of Revenue from Operations (Cost of Goods Sold)

9,00,000

Inventory in the beginning of the year

2,50,000

Inventory at the close of the year

3,50,000


 Answer:

Inventory tunover ratio

= Cost of goods sold / Average Stock

Cost of Goods Sold

= 9,00,000

Average Stock

= Opening Stock + Closing Stock/2

=2,50,000+3,50,000/2

= 3,00,000

Inventory turnover ratio

=9,00,000/3,00,000

= 3 Times

 

 

Ts Grewal Solution 2023-2024

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Class 12 / Volume – I

Chapter 3 – Accounting Ratio

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