Question 76:
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 77:
Calculate
Debt to Capital Employed Ratio from the following information:
Debt
to Equity Ratio 2:1; Long-term Borrowings ₹18,00,000; Long-term Provision
₹6,00,000; Reserves and Surplus ₹2,00,000.
Answer:
Debt to
Equity Ratio= Debt ÷ Equity
Equiy = 18,00,000÷2=
9,00,000
Debt
to Capital Employed Ratio = Debt (Long-term Debt)÷
Capital Employed
Capital Employed = Equity
+ Long-Term Debt
Capital Employed=9,00,000+18,00,000=27,00,000
Debt to Capital Employed Ratio =18,00,000÷27,00,000=
0.67: 1
Working Note:
1.
Debt= Long-term Borrowings+ Long-term Provision
Debt=
18,00,000 + 2,00,000 =20,00,000
2.
Reserves and Surplus will not be included separately, as they are already
included in Equity (or Shareholders’ Fund)
Question 78:
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 79:
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 |
Question 80:
Cost of Revenue from Operations (Cost of Goods Sold)
₹5,00,000; Purchases ₹5,50,000; Opening
Inventory ₹1,00,000.
Calculate Inventory Turnover Ratio.
Answer:
Cost of Goods Sold = Opening Inventory + Purchases
− Closing Inventory
5,00,000 = 1,00,000 +
5,50,000 − Closing Inventory
Closing Inventory = 1,50,000
|
Average Stock |
= Opening
Stock + Closing Stock/2 =1,00,000+1,50,000/2 = 1,25,000 |
|
Inventory tunover ratio |
= Cost of goods sold / Average Inventory =5,00,000/1,25,000 =4 times |
Ts Grewal Solution 2025-2026
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Class 12 / Volume – III
Chapter 4 – Accounting Ratios