Question 181:
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 182:
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 183:
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 profitBefore Interest, Tax and dividend ×100/ Capital Employed
Net profitBefore 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 184:
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 |
|
|
|
(NCERT)
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 185:
From the following information, calculate:
(i) Gross Profit Ratio;
(ii) Working Capital Turnover Ratio; and
(iii) Proprietary Ratio.
|
Particulars |
Rs. |
Particulars |
Rs. |
|
Paid-up Capital |
8,00,000 |
Current Assets |
5,00,000 |
|
Credit Sales |
3,00,000 |
Current Liabilities |
2,90,000 |
|
9% Debentures |
3,40,000 |
Cash Sales: 75% of Credit Sales |
|
|
Cost of Goods Sold |
6,80,000 |
Net Profit for the year |
1,55,000 |
Answer:
(i) Gross Profit Ratio
Gross Profit Ratio = Gross Profit Ratio×100/Revenue from Operations
Gross Profit Ratio = -1,55,000×100/5,25,000
Gross Profit Ratio = -29.52%
Working Notes:
Gross Profit = Revenue form operation - Cost of Goods Sold
-1,55,000 = 5,25,000- 6,80,000
Revenue form operation = Credit Sales+ Cash Sales: 75% of Credit Sales
Revenue form operation = 3,00,000 + 2,25,000=5,25,000
(ii) Working Capital Turnover Ratio
Working Capital Turnover Ratio = Revenue from Operations/Working Capital
Working Capital Turnover Ratio = 5,25,000/Working Capital
Working Capital Turnover Ratio = 5,25,000/2,10,000= 2.5 Times
Working Notes:
Working Capital = Current Assets + Current Liabilities
Working Capital = 5,00,000 + 2,90,000 = 2,10,000
(iii) Proprietary Ratio
Proprietary Ratio = Proprietary’s fund×100/ Total Assets
Proprietary Ratio = 9,55,000×100/15,85,000
Proprietary Ratio = 60.25%
Working Notes:
Proprietary’s fund = Paid-up Capital + Net Profit for the year
Proprietary’s fund = 8,00,000+1,55,000=9,55,000
Total Assets = Total Liabilities
Total Assets = Paid-up Capital+9% Debentures+ Net Profit for the years+Current Liabilities
Total Assets = 8,00,000 + 3,40,000+1,55,000+2,90,000