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