Question
151:
Calculate following ratios on the basis of the given information:
(i) Current Ratio; (ii) Acid Test Ratio; (iii) Operating Ratio; (iv) Gross Profit Ratio.
|
Current Assets |
`3,50,000; |
Revenue from Operations (Sales) |
`6,00,000; |
|
Current Liabilities |
`1,75,000; |
Operating Expenses |
`2,00,000; |
|
Inventory |
`1,50,000; |
Cost of Revenue from Operations |
`3,00,000; |
Answer:
(i) Current Ratio;
Current Ratio= Current Assets/ Current Liabilities
Current Ratio= 3,50,000/1,75,000
Current Ratio= 2/1= 2:1
(ii) Acid Test Ratio;
Acid Test Ratio= Quick Assets/ Current Liabilities
Quick Assets=3,50,000-1,50,000=2,00,000
Current Ratio= 2,00,000/1,75,000
Current Ratio= 1.14:1
(iii) Operating Ratio;
Operating Cost = Operating Expenses + Cost of Revenue from Operations
Operating Cost =2,00,000+3,00,000=5,00,000
Operating ratio= Operation Cost/ Revenue from Operation
Operating ratio= 5,00,000×100/6,00,000=83.33%
(iv) Gross Profit Ratio
Gross Profit = Revenue from Operations (Sales) - Cost of Revenue from Operations
Gross Profit = 6,00,000-3,00,00
Gross Profit = 3,00,000
Gross Profit Ratio= Gross Profit×100/ Revenue from Operations
Gross Profit Ratio= 3,00,000×100/6,00,000 =50%
Question
152:
From the information given below, calculate any three of the following ratio:
(i) Gross Profit Ratio;
(ii) Working Capital Turnover Ratio:
(iii) Debt to Equity Ratio; and
(iv) Proprietary Ratio.
|
|
` |
|
|
` |
|
Revenue
from Operations (Net Sales) |
5,00,000 |
|
Current
Liabilities |
1,40,000 |
|
Cost
of Revenue from Operations (Cost of Goods Sold) |
3,00,000 |
|
Paid-up
Share Capital |
2,50,000 |
|
Current
Assets |
2,00,000 |
|
13%
Debentures |
1,00,000 |
Answer:
(i)
Net Sales = 5,00,000
Cost of Goods Sold = 3,00,000
Gross Profit = Net Sales − Cost of Goods Sold
= 5,00,000 − 3,00,000 = 2,00,000
Gross Profit Ratio= Gross profit ×100/Net Sales
= 2,00,000×100/5,00,000
= 40%
(ii)
Current Assets = 2,00,000
Current Liabilities = 1,40,000
Working Capital = Current Assets − Current Liabilities
= 2,00,000 − 1,40,000 = 60,000
Working Capital turnover ratio= Net Sales / Working Capital
=5,00,000/60,000
=8.33 Times
(iii)
Long-term Debts = 13% Debentures = 1,00,000
Equity = Paid-up Share Capital = 2,50,000
Debt-Equity Rato= Long-term Debts/ Equity
=1,00,000/2,50,000
=0.4:1
(iv)
Total Assets = Total Liabilities
= Current Liabilities + Paid-up Share Capital + 13% Debentures
= 1,40,000 + 2,50,000 + 1,00,000
= 4,90,000
Propietary Ratio= Shareholders’ Fund/ Total Assets
=2,50,000/4,90,000
=0.51:1
Question
153:
On the basis of the following information calculate:
(i) Debt to Equity Ratio; and
(ii) Working Capital Turnover Ratio.
|
Information: |
|
` |
|
|
` |
|
Revenue
from Operations: |
(a)
Cash Sales |
40,00,000 |
|
Paid-up
Share Capital |
17,00,000 |
|
|
(b)
Credit Sales |
20,00,000 |
|
6%
Debentures |
3,00,000 |
|
Cost
of Goods Sold |
|
35,00,000 |
|
9%
Loan from Bank |
7,00,000 |
|
Other
Current Assets |
|
8,00,000 |
|
Debentures
Redemption Reserve |
3,00,000 |
|
Current
Liabilities |
|
4,00,000 |
|
Closing
Inventory |
1,00,000 |
Answer:
(i)
Long-term Debts = 6% Debentures + 9% Loan from Bank
= 3,00,000 + 7,00,000 = 10,00,000
Equity = Paid-up Share Capital + Debenture Redemption Reserve
= 17,00,000 + 3,00,000 = 20,00,000
Debts-Equity Ratio= Long-term Debts/ Equity
=10,00,000/20,00,000
=0.5:1
(ii)
Current Assets = Other Current Assets + Inventory
= 8,00,000 + 1,00,000
= 9,00,000
Working Capital = Current Assets − Current Liabilities
= 9,00,000 − 4,00,000
= 5,00,000
Net Sales = Cash Sales + Credit sales
= 40,00,000 + 20,00,000
= 60,00,000
Working Capital tunover Ratio=Net
Sales/Working Capital
=60,00,000/5,00,000
= 12 Times
Question
154:
From the following, calculate (a) Debt to Equity Ratio; (b)
Total Assets to Debt Ratio; and (c) Proprietary Ratio:
|
Equity
Share Capital |
` 75,000 |
|
Debentures |
` 75,000 |
|
Preference
Share Capital |
` 25,000 |
|
Trade
Payable |
` 40,000 |
|
General
Reserve |
` 45,000 |
|
Outstanding
Expenses |
` 10,000 |
|
Balance
in Statement of Profit and Loss |
` 30,000 |
|
|
|
Answer:
(a)
Debt to Equity Ratio=Long term Debts/Shareholders' Funds
Debt to Equity Ratio=Debentures
Equity=Share Capital+Preference Share Capital+General Reserve+Balance in Statement of Profit & Losss
Debt to Equity
Ratio=75,000/75,000+25,000+45,000+30,000=0.43:1
(b)
Total Assets to Debt Ratio=Total Assets/Long term Debts
Total Assets to Debt Ratio=Equity Share Capital+Preference Share Capital+General Reserve+Balance in Statement of Profit & Loss/Debentures+Trade Payables+Outstanding ExpensesDebentures
Total Assets to Debt Ratio=75,000+25,000+45,000+30,000+75,000+40,000+10,000/75,000
=4:1
(c)
Proprietary Ratio=Shareholders' Funds/Total Assets
Proprietary Ratio=Equity Share Capital+Preference Share Capital+General Reserve+Balance in Statement of Profit & Loss
Equity Share Capital+Preference Share Capital+General Reserve+Balance in Statement of Profit & Loss+Debentures+Trade Payables+Outstanding Expenses
Proprietary Ratio=75,000+25,000+45,000+30,000/75,000+25,000+45,000+30,000+75,000+40,000+10,000
=0.58:1 or 58.33%
Question
155:
From the following information related to Naveen Ltd.,
calculate (a) Return on Investment and (b) Total Assets to Debt Ratio:
Information: Fixed Assets ` 75,00,000; Current
Assets ` 40,00,000; Current
Liabilities ` 27,00,000; 12%
Debentures ` 80,00,000 and Net
Profit before Interest, Tax and Dividend ` 14,50,000.
Answer:
1) Return on Investment
Return on Investment = Net profit Before Interest, Tax and dividend ×100/
Capital Employed
Net profit
Before Interest, Tax and dividend=14,50,000
Capital
employed= Fixed Assets + Current Assets+ Current Liabilities
=75,00,000+40,00,000+27,00,000
=88,00,000
Return on Investment =14,50,000×100/88,00,000
=16.48%
2) Total Assets to Debt to Ratio
Total Assets to Debt Ratio = Total Assets/Debt
Total Assets = Fixed Assets + Current Assets
= ` (75,00,000 + 40,00,000)
= ` 1,15,00,000
Debt = ` 80,00,000
Total Assets to Debt Ratio = 1,15,00,000/80,00,000
= 1.44:1
Question 156:
From the following information, calculate Return on Investment (or Return on Capital Employed):
|
|
|
|
|
|
Particulars |
` |
||
|
Share Capital |
5,00,000 |
||
|
Reserves
and Surplus |
2,50,000 |
||
|
Net
Fixed Assets |
22,50,000 |
||
|
Non-current
Trade Investments |
2,50,000 |
||
|
Current
Assets |
11,00,000 |
||
|
10%
Long-term Borrowings |
20,00,000 |
||
|
Current
Liabilities |
8,50,000 |
||
|
Long-term
Provision |
NIL |
||
|
|
|
|
|
Answer:
Net
Profit before tax = 6,00,000
Net Profit before interest, tax and dividend = Net Profit before tax + Interest
on long-term borrowings
= 6,00,000 + 10% of 20,00,000 = 6,00,000 + 2,00,000 = 8,00,000
Capital Employed = Share Capital + Reserves and Surplus + Long-term borrowings
= 5,00,000 + 2,50,000 + 20,00,000 = 27,50,000
Return on Investment = Net
profit Before Interest, Tax and Dividend
×100/ Capital Employed
=8,00,000×100/27,50,0000
=29.09%
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Ts Grewal Solution 2022-2023
Class 12 / Volume – 3
Chapter 4 – Accounting Ratios
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