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12th | Accounting Ratios | Question No. 151 To 156 | Ts Grewal Solution 2022-2023

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

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