Question 121:
Gross Profit at 25% on cost; Gross profit ₹5,00,000;
Equity Share Capital ₹10,00,000; Reserves and Surplus 2,00,000; Long-term
Loan 3,00,000; Fixed Assets (Net) ₹10,00,000. Calculate WorkingCapital
Turnover Ratio
Answer:
Gross Profit = 25% on Cost
Let Cost be = ₹x
Gross Profit =x×25/100=25x/100
Or, 5,00,000=25x/100
Or, x=5,00,000×100/25=20,00,000
∴ Cost of Goods Sold = 20,00,000
Net sales =Cost of goods sold+Gross profit
=20,00,000+5,00,000=25,00,000
Capital employed = Equity share Capital + Reserve and surplus
+ Long – term loan
=10,00,000+200,000+3,00,000=15,00,000
Working Capital = Capital employed- Fixed Assets
=15,00,000-10,00,000=5,00,000
Working Capital Turnover=Net sales/ Working Capital
=25,00,000/5,00,000
Question 122:
A company earns Gross Profit of 25% on cost. For the year
ended 31st March, 2017 its Gross Profit was ₹5,00,000; Equity Share
Capital of the company was ₹10,00,000; Reserves and Surplus ₹2,00,000;
Long-term Loan ₹3,00,000 and Non-current Assets were ₹10,00,000.
Compute the 'Working Capital Turnover Ratio' of the company.
Answer:
Working
Capital Turnover Ratio= Revenue from Operation/Working Capital
Gross Profit = 25% on Cost
Let Cost of Goods sold be ₹100.
Gross Profit = ₹25
Revenue from Operations = ₹(100 + 25) = ₹125
When Gross profit is ₹25, revenue from operations is= ₹125
And, if Gross profit is ₹5,00,000 then revenue from operations will be=
₹(5,00,000 × 125/25) = ₹25,00,000
Capital Employed = Shareholder’s Funds + Non-Current Liabilities
= ₹(10,00,000 + 2,00,000 + 3,00,000) = ₹15,00,000
Also, Capital Employed = Non Current Assets + Working Capital
Alternatively, Working Capital = Capital Employed – Non-current Assets =
₹(15,00,000 – 10,00,000)= ₹5,00,000
Hence, Working Capital Turnover Ratio= 25,00,000/5,00,000= 5 times
Fixed Assets Turnover Ratio
Question 123:
Net
Fixed Assets ₹5,00,000, Revenue from Operations 25,00,000.
Calculate
Fixed Assets Turnover Ratio.
Answer:
Fixed
Assets Turnover Ratio= Revenue from Operations/Net Fixed Assets
Fixed Assets Turnover Ratio=
25,00,000/ 5,00,000= 5 Times
Question 124:
Fixed
Assets (at Cost) ₹7,00,000, Accumulated Depreciation ₹1,00,000,
Credit Revenue from Operations ₹17,00,000, Cash Revenue from Operations
₹1,00,000.
Calculate
Fixed Assets Turnover Ratio.
Answer:
Fixed
Assets Turnover Ratio= Revenue from Operations/Net Fixed Assets
Fixed Assets Turnover Ratio=
18,00,000/ 6,00,000= 3 Times
Working
note:
(i)
Net Fixed Assets=Fixed Assets (at Cost)-Accumulated Depreciation
Net Fixed Assets=7,00,000 -1,00,000
Net
Fixed Assets= 6,00,000
(ii)
Revenue from operation= Credit Revenue from Operations + Cash Revenue
from Operations
Revenue from
operation= 17,00,000+ 1,00,000=18,00,000
Question 125:
Capital
Employed ₹2,50,000, Working Capital ₹50,000, Cost of Revenue from
Operations ₹8,00,000,
Gross
Profit ₹2,00,000. Calculate Fixed Assets Turnover Ratio.
Answer:
Fixed
Assets Turnover Ratio= Revenue from Operations/Net Fixed Assets
Fixed Assets Turnover Ratio=
10,00,000/ 2,00,000= 5 Times
Working
note:
1.
Revenue
from operation= Cost of Revenue from Operations+ Gross Profit
Revenue from operation=
8,00,000+ 2,00,000=10,00,000
2.
Net
Fixed Assets= Capital Employed - Working Capital
Net
Fixed Assets=2,50,000-50,000
Net
Fixed Assets= 2,00,000
Ts Grewal Solution 2025-2026
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Class 12 / Volume – III
Chapter 4 – Accounting Ratios