Ratio and Quick Ratio the following, calculate Current Ratio: z z Receivables (Sundry Debtors) 7,20,000 | Bills Payable 80,000 Expenses 1,60,000 | Sundry Creditors 400,000 ‘and Cash Equivalents 2,00,000 | Debentures 16,00,000 ible Securities 2,00,000 | Inventories 3,20,000 and Building 20,00,000 | Expenses Payable 3,20,000 [Ans.: Current Ratio = 2: 1.) : Marketable securities means the Short-term Investment] jiculate Current Ratio from the following information: | @__ | Particulars z 20,00,000 | Non-current Liabilities 520,000 10,00,000 | Non-current Investments 6,00,000 | 12,80,000 [Ans.: Current Ratio = 2: 1.) “urrent Assets % 20,00,000, Inventories % 10,00,000, Working Capital % 12,00,000. Calculate Current Ratio. [Ans.: Current Ratio = 2.5: 1.] fints: 1. Inventories are already included in Current Assets. 2. Current Liabilities = Current Assets - Working Capital.) je Payables % 50,000, Working Capital € 9,00,000, Current Liabilities & 3,00,000. Calculate Current Ratio. [Ans.: Current Ratio = 4: 1.] jint: Trade Payables are already included in Current Liabilities] forking Capital % 6,00,000, Total Debt & 27,00,000, Non-current Liabili ies T 24,00,000. Calculate rent Ratio. (Ans.: Current Ratio = 3: 1.) “urrent Ratio is 2.5, Working Capital is & 1,50,000. Calculate the amount of Current Assets and irrent Liabilities. (Ans.: Current Assets =X 2,50,000; Current Liabilities = & 1,00,000.) king Capital is ¥ 18,00,000; Trade Payables 1,80,000; and Other Current Liabilities are Z 4,20,000. culate Current Ratio. (Ans.: Current Ratio = 4 : 1.] king Capital % 9,00,000; Total Debts (Liabilities) t 19,50,000; Long-Term Debts % 15,00,000. Calculate irrent Ratio. [Ans.: Current Ratio = 3: 1.) ints: 1. Current Liabilities = Total Debts - Long-term Debts. 2. Current Assets = Working Capital + Current Liabilities it Assets are & 7,50,000 and Working Capital is € 2,50,000. Calculate Current Ratio. (Ans.: Current Ratio = 1.5: 1.) ‘company had Current Assets of % 4,50,000 and Current Liabilities of % 2,00,000. Afterwards it purchased is for % 30,000 on credit. Calculate Current Ratio after the purchase. [Ans.: Current Ratio = 2.09: 1.) nt Liabilities of a company were & 1,75,000 and its Current Ratio was 2; 1. It paid ® 30,000 to a itor. Calculate Current Ratio after payment. {Ans.: Current Ratio = 2.21: 1.)3.104 Analysis of Financial Stateme, 7 12, Ratio of Current Assets (€ 3,00,000) to Current Liabilities (® 2,00,000) is 1.5 + 1. The ae interested in maintaining a Current Ratio of 2: 1 by paying off a part of the Gurrent tgs Compute amount of the Current Liabilities that should be paid so that the Current Ratig may be maintained. {Ans.: Current Liabilities to the extent of & 1,00,000 align leva achieve the Current Ratio atthe level pate Mint: Let the amount of Current Liabilities to be paid = x ag %3,00,000-x %2,00,000-x thus, or % 400,000 - 2x = % 3,00,000 x = %1,00,000) 13. Ratio of Current Assets (& 8,75,000) to Current Liabilities (® 3,50,000) is 2.5: 1. The firm wants to Current Ratio of 2: 1 by purchasing goods on credit. Compute amount of goods that should ben rl on credit (Ans.: Purchase goods of seal 14. A frm had Current Assets of & 5,00,000. It paid Curent Liabilities of &1,00,000 and the Cureg Secame 2:1, Determine Current Liabilities and Working Capital before and after the payment was a (Ans.: Current Liabilities before Payment & 3,00,000; after Payment® pone Working Capital before Payment & 2,00,000; after Payment & 20000 15. A firm had Current Liabilities of € 5,40,000. It purchased stock of % 60,000 on credit. After the Purchase of stock, Current Ratio was 2: 1. Calculate Current Assets and Working Capital after and before the tak was purchased, [Ans.: Current Assets after purchase ® 12,00,000; Working Capital after purchase % 6.00 009 Current Assets before purchase ® 11,40,000; Working Capital before purchase 6 00000) 1§ State, giving reason, whether the Current Ratio will improve or decline or will have no effect in each of the following transactions if Current Ratio is 2: 1: (a) Cash paid to Trade Payables. (b) Bills Payable discharged. (2) Bills Receivable endorsed to a creditor. (d) Payment of final Dividend already declared. (€) Purchase of Stock-in-Trade on credit. (f) Bills Receivable endorsed to a Creditor dishonoured. (g) Purchase of Stock-in-Trade for cash. th). Sale of Fixed Assets (Book Value of € 50,000) for € 45,000. i). Sale of Fixed Assets (Book Value of ® 50,000) for & 60,000. [Ans.: (a) Improve; (b) Improve; (c) Improve; (d) Improve; (e) Decl (f) Decline; (g) No Effect; (h) Improve: (0 17. From the following information, calculate Liquid Ratio: [Particulars $ 4,00,000 | Trade Receivables 1,00,000 | Current Liabilities Particulars Current Assets Inventories Prepaid Expenses 20,000 quid Ratio = 2°joo the fostiowing Information, calculate Quick Ratio t z Debt 12,00,000 | Long-term Provisions 400000 a esther as rent Investments 1,00,000 | Prepaid Expenses om {ono-term Borrowings 4,00,000 fAns.: Quick Ratio =1.5 1 19, quick Assets & 3,00,000; Inventory (Stock) & 80,000; Prepaid Expenses & 20,000; Working Capital ® 240,000 Calculate Current Ratio, een Hints: Current Assets = Quick Assets + Inventory + Prepaid Expenses. 2, Current Liabilities = Current Assets - Working Capital igo. Current Assets X 6,00,000; Inventories & 1,20,000; Working Capital € 5,04,000. Calculate Quick Ratio. [Ans.: Quick Ratio = 5:1.) {Hints: 1. Quick Assets = Current Assets ~ Inventories. 2. Current Liabilities = Current Assets - Working Capital.) gt. Current Liabilities of a company are % 6,00,000. Its Current Ratio is 3: 1 and Liquid Ratio is 1: 1. Calculate value of Inventory. [Ans.: Inventory = & 12,00,000.) "22. Moon Ltd. has a Current Ratio of 3.5: 1 and Quick Ratio of 2: 1. If the Inventories is € 24,000; calculate total Current Liabilities and Current Assets. [Ans.: Current Assets = % 56,000; Current Liabilities = © 16,000.) 33. Umesh Ltd. has Current Ratio of 4.5 : 1 and a Quick Ratio of 3 : 1. If its inventory is € 36,000, find out its total Current Assets and total Current Liabilities. (Ans.: Current Liabilities = € 24,000; Current Assets = 1,08,000; Quick Assets = 72,000.) '24, Current Ratio 4; Liquid Ratio 2.5; Inventory & 6,00,000. Calculate Current Liabilities, Current Assets and Liquid Assets. {Ans.: Current Liabilities = % 4,00,000; Current Assets = & 16,00,000; Liquid Assets = ® 10,00,000.] 25, Current Liabilities of a company are & 1,50,000. Its Current Ratio is 3: 1 and Acid Test Ratio (Liquid Ratio) is 1: 1. Calculate values of Current Assets, Liquid Assets and Inventory. 4,50,000; Liquid Assets = 1,50,000; Inventory = ® 3,00,000.] [Ans.: Current Assets = 26. Xolo Ltd's Liquidity Ratio is 2.5 : 1. Inventory is T 6,00,000. Current Ratio is 4: 1. Find out the Current Liabilities. [Ans.: Current Liabilities = 4,00,000.) 27. Current Assets of a company are & 5,00,000, Its Current Ratio is 2.5 : 1 and Quick Ratio is 1 : 1. Calculate values of Current Liabilities, Liquid Assets and Inventory. [ans.: Current Liabilities = % 2,00,000; Liquid Assets = & 2,00,000; Inventory =X 3,00,000.) .. Working Capital of a company is ® 3,60,000; Total Debts 7,80,000; Long-term Debts € 6,00,000; Inventories % 1,80,000. Calculate Liquid Ratio. {Ans.: Liquid Ratio = 2:1.) {Hints: 1. Current Liabilities =Total Debts (Liabilities) - Long-term Debts (& 7,80,000 -% 6,00,000=8 1,80,000). 2. Current Assets = Working Capital + Current Liabilities (® 3,60,000 + 1,80,000 = 5,40,000). 3. Liquid Assets = Current Assets - Inventories (® 5,40,000 - ® 1,80,000 = ® 3,60,000),] ays unting Ratios 3.10535. Capital Employed % 20,00,000; Fixed Assets % 14,00,000; Current Lial 36. From the following calculate: 3.106 Analysis of Financial Stateme, cae 29, Calculate Quick Ratio from the following Working Capital € 400,000; Total Debts € 18,00,000; Non-Current Liabilities & Prepaid Expenses & 10,000, 30. Quick Ratio of a company is 2: 1, State, giving reasons, which of the following transactions (0 Improve, (il) Reduce, (ili) Not change the Quick Ratio: (a) Purchase of goods for cash; (b) Purchase of goods on credit; (c) Sale of goods (costing gag ¥ 20,000; (d) Sale of goods (costing & 20,000) for ¥ 22,000; (e) Cash received from Trade Receiva (Ans.: (a) Reduce; (b) Reduce; (©) Improve; (d) Improve; (e) No ch, 31. Quick Ratio of Z Ltd. is 1: 1. State, with reason, which of the following transactions would () vel (ii) Decrease or (ii) Not change the ratio: (a) Included in the trade payables was bill payable of & 3,000 which was met on maturity; (b) Debentures of & 50,000 were converted into equity shares. (8g (Ans.: (a) No change (b) ‘era 32 The Quick Ratio of a company is 0.8 ; 1. State, with reason, whether the following transactions yy increase, decrease or not change the Quick Ratio: (i Purchase of loose tools for & 2,000; (ii) Insurance premium paid in advance & 500; (ill) Sale Of goods ‘on credit & 3,000; (iv) Honoured a bills payable of & 5,000 on maturity. (C6se 20 tans. ( Decrease; i) Decrease; i) Increase; (v Decrea| 33. Venus Ltd's Inventory is €3,00,000. Total Liquid Assets are € 12,00,000 and Quick Ratio is 2: 1. Workout Current Ratio. (Ans.: Current Ratio =25 1) Hints: 1. 2/1 (Quick Ratio) = H'Quid Assets (€ 12,00,000) Current Liabilities %12,00,000/2 = & 6,00,000, 2. Current Assets = Liquid Assets + Inventory = 15,00,000] Current Liabilitie 34, Total Assets & 11,00,000; Fixed Assets & 5,00,000; Capital Employed & 10,00,000. There were no Long-term Investments. Calculate Current Ratio. [Ans.: Current Ratio = 6:1] [Hints:1. Current Assets = Total Assets - Fixed Assets. 2. Current Liabilities = Total Assets ~ Capital Employed.) ies % 2,00,000. There are no Long-term Investments. Calculate Current Ratio. [Ans.: Current Ratio (Hint: Current Assets = Capital Employed + Current Liabilities ~ Fixed Assets] Current Ratio; and (ii) Quick Ratio: z x Total Debt 12,00,000 | Long-term Borrowings oom Total Assets 16,00,000 | Long-term Provisions hoai00 Property, Plant and Equipment 6,00,000 | Inventories 190000 Non-current investments 1,00,000 | Prepaid Expenses 10000 Long-term Loans and Advances 100,000 [Ans.: Current Ratio = 2ynting Ratlos 3.107 . ng is the Balance Sheet of C rescent Chemical Works Limited as at 31st March, 2023: 3 TNoteno. | % Pe ry AND LIABILITIES | + 1 eee pareholders Funds | Hy share Copal | 70,000 vy) Reservesand Surplus | os f0 2, Non-Current Liabilities Long-term Borrowings hie 3, current Liabilities | a) Short-term Borrowings 1 300 (p) Trade Payables (Creditors) | 13000 {) Short-term Provisions: Provision for Tax | 4000 Total [150,000 yh. ASSETS 1, Non-Current Assets (a) Property Plant and Equipment and Intangible Asets: Property, lant and Equipment 45,000 (o) Non-current Investments 5,000 2. Current Assets (a) Inventories (Stock) esas (b) Trade Receivables (Debtors) 30,000 (@) Cash and Cash Equivalents FO g00 Total 750,000 Compute Current Ratio and Liquid Ratio. Ans. Current Ratio = 5: 1; Liquid Ratio = 2.5 : 11 Debt to Equity Ratio [Hints: 1. Long-term Debts =Total Debts ~ Current Liabilities. 2. Shareholders’ Funds = Total Assets - Total Debts.) 40. From the following information, calculate Debt to Equity Rat 10,000 Equity Shares of € 10 each fully paid 5,000; 9% Preference Shares of & 10 each fully paid General Reserve Surplus, i, Balance in Statement of Profit & Loss 10% Debentures Current Liabilities 38, Total Assets € 2,60,000; Total Debts % 1,80,000; Current Liabilities € 20,000. Calculate Debt to Equity Ratio. [Ans.: Debt to Equity Ratio = 2: 1 39. Calculate Debt to Equity Ratio: Equity Share Capital & 5,00,000; General Reserve 90,000; Accumulated Profits € 50,000; 10% Debentures & 1,30,000; Current Liabilities % 1,00,000. [Ans.: Debt to Equity Ratio = 0.203 : 1 (i.e, & 1,30,000 = % 6,40,000).] z 2,00,000 1,00,000 90,000 40,000 1,50,000 1,00,000 {Ans.: Debt to Equity Ratio = 0.35 : 1.)3.108 Analysis of Financial Sta a 42 43. 45. 47. 49. Balance Sheet had the following amounts as at 31st March, 2023 t O% Preference Share Capital 5,00,000 } Current Assets ' Equity Share Capital 15,00,000 | Current Liabilities "49 Securities Premium Reserve 1,00,000 | investments (in other companies) '4y Reserves and Surplus 400,000 | Property, Plant and Equipment-—Cost 2m Long-term Loan from IDBI @ 9% 30,00,000 | Depreciation Written off t 1 Calculate ratios indicating the Long-term and the Short-term financial position of the compa {Ans.: Debt fo Equity Ratio = 1.25 : 1; Curent Rat “4 15; Calculate Debt to Equity Ratio from the following information: z Property, Plant and Equipment (Gross) 840,000 | Current Assets Fe Accumulated Depreciation 1,40,000 | Current Liabilities nA Non-current investments 14,000 | 10% Long-term Borrowings ia Long-term Loans and Advances. 56,000 | Long-term Provisions 1, (Ans.: Debt t0 Equity Ratio x 7, From the following information, calculate Debt to Equity Ratio: Total Debts & 6,00,000; Current Liab : % 2,00,000 and Capital Employed & 6,00,000, (Ans.: Debt to Equity Ratio = 2; Calculate Debt to Equity Ratio: Total Assets % 14,00,000; Total Debt % 12,00,000; Capital Emp) % 10,00,000. (Ans.: Debt to Equity Ratio= 411) Capital Employed ¥ 8,00,000; Shareholders’ Funds ® 2,00,000. Calculate Debt to Equity Ratio, (Ans.: Debt to Equity Ratio = 3:1) King Ltd. has Current Ratio of 2.5 ; 1. Its Working Capital is € 1,20,000. Total Assets are of 8 3,80,000 and Total Debt of % 2,80,000. Calculate Debt to Equity Ratio. {ans.: Debt to Equity Ratio = 2:1) Monica Ltd. has Quick Ratio of 1.5 : 1. Its Working Capital is & 1,20,000 and its inventories are of % 80,000. Total Assets of % 3,80,000 and Total Debts of ® 2,80,000. Calculate Debt to Equity Ratio. {Ans.: Debt to Equity Ratio = 2:1) When Debt to Equity Ratio is 2, state, giving reason, whether this ratio will increase, decrease or will have no change in each of the following cases: (i) Sale of Land (Book value % 4,00,000) for % 5,00,000; (i) Issue of Equity Shares for the purchase of Plant and Machinery worth & 10,00,006; (ili) Issue of Preference Shares for redemption of 13% Debentures, worth & 10,00,000. [ans.: (i) Decrease; (i) Decrease; (il) Decrease) Debt to Equity Ratio of a company is 0.5 : 1, Which of the following would increase, decrease ot not change it (i) Issue of Equity Shares; (li) Cash received from debtors; ill). Redemption of debentures; (iv) Purchased goods on credit? {Ans.: (i) Decrease; (i) No change; (i) No change; (wv) No change! Assuming that the Debt to Equity Ratio is 2 : 1, state, giving reasons, which of the following transactions would (i) Increase; (il) Decrease; (iil) Not alter Debt to Equity Ratio: (i) issue of new shares for cash (ii) Conversion of debentures into equity shares. (ii) Sale of a fixed asset at profit (iv). Purchase of a fixed asset on long-term deferred payment basis, (V) Payment to creditors,3.109 the following Balance Sheet of ABC Ltd. as at 31st March, 2023, calculate Debt to Equity Pat ‘AND LIABILITIES. fa) Share Capito! Equity Share Capital Wi) 10% Preference Share Capital 5,00,000 5,00,000 | 10,00,000 {b) Reserves and Surplus | 240,000 2. Non-Current Liabilities Long-term Borrowings (Debentures) | 250,000 +3. Current Liabilities fa) Trade Payables 430,000 {b) Other Current Liabilities 20,000 {0 Short-term Provisions: Provision for Tax |_ 3,00,000 Total | | 22.40.00 . ASSETS i 4, Non-Current Assets Property, Plant and Equipment and intangible Assets: {i) Property, Plant and Equipment (i) Intangible Assets 2. Current Assets | {a) Inventories | (b) Trade Receivables (0) Cash and Cash Equivalents Total {Ans.: Debt to Equity Ratio = 0.2 : 1. I Assets to Debt Ratio Calculate Total Assets to Debt Ratio from the following information: ‘Long-term Debts % 4,00,000; Total Assets % 7,70,000. {Ans.: Total Assets to Debt Ratio = 1.925 : } ‘Shareholders’ Funds % 1,60,000; Total Debts & 3,60,000; Current Liabilities & 40,000. Calculate Total Assets to Debt Ratio. {Ans.: Total Assets to Debt Ratio = 1.625 > 1.) [Hints: 1. Long-term Debts = Total Debts ~ Current Liabilities. 2. Total Assets = Long-term Debts + Shareholders’ Funds + Current Liabilities.) Total Debt % 60,00,000; Shareholders’ Funds @ 10,00,000; Reserves and Surplus % 2,50,000; Current Assets % 25,00,000; Working Capital % 5,00,000. Calculate Total Assets to Debt Ratio. [Ans.: Total Assets to Debt Ratio = 1.75: 1) {Hint: Reserves and Surplus are already included in Shareholders’ Funds.) Total Debt 2 15,00,000; Current Liabilities % 5,00,000; Capital Employed ¥ 15,00,000. Calculate Total Assets to Debt Ratio. (Ans.; Total Assets to Debt Ratio = 2: 1) Total Debt % 12,00,000; Shareholders’ Funds % 2,00,000; Reserves and Surplus € 50,000; Current Assets 5,00,000; Working Capital ® 1,00,000, Calculate Total Assets to Debt Ratio. [Ans.: Total Assets (0 Debt Ratio = 1.75: 1) {Hint: Reserves and Surplus are already included in Shareholders’ Funds.)Analysis of Financial Statement, 57. Calculate Total Assets to Debt Ratio from the following information: zg Particulars Total Assets 15,00,000 | Bills Payable x Total Debts 12,00,000 | Bank Overdraft Son Creditors 90,000 } Outstanding Expenses 50) {Ans.: Total Assets to Debt Ratio ~ a 58. Calculate ‘Total Assets to Debt Ratio’ from the following information: S357) Equity Share Capital A Long-term Borrowings tte Surplus, ie, Balance in Statement of Profit & Loss rete General Reserve Oty Current Liabilities 70-09 Long-term Provisions 1.200) (Ans. Total Asets to Debt Rati 2 (Hints: 1. Total Assets = Total Liabilities = Equity Share Capital + Long-term Borrowings + Surpus 4 Balance in Statement of Profit & Loss_+ General Reserve + Current Liabilities + Longa? Provisions = % 9,00,000. 7 2. Debt = Long-term Borrowings + Long-term Provisions = ® 3,00,000.] 59. From the following information, calculate Total Assets to Debt Ratio: . z Property, Plant and Equipment (Gross) 6,00,000 | Accumulated Depreciation 1,00,009 Non-current Investments 10,000 | Long-term Loans and Advances 40,000 Current Assets 2,50,000 | Current Liabilities 200000 Long-term Borrowings 300,000 | Long-term Provisions 100009 (Ans.: Total Assets to Debt Ratio = Proprietary Ratio. 60. From the following information, calculate Proprietary Ratio: Share Capital % 3,00,000 | Reserves and Surplus 2 1000 Non-current Assets % 13,20,000 | Current Assets % 60000 [Ans.: Proprietary Ratio = 0.25 : 1 or 25%) 61. From the following information, calculate Proprietary Ratio: z Equity Share Capital 300000 Preference Share Capital 150000 Reserves and Surplus Debentures Trade Payables Property, Plant and Equipment Short-term Investments Other Current Assets [Ans.: Proprietary Ratio = 0.70: 1 62. Calculate Proprietary Ratio from the following: z x Equity Share Capital 4,50,000 | 9% Debentures 3.00000 10% Preference Share Capital 3,20,000 | Property, Plant and Equipment 7,00,000 Reserves and Surplus 65,000 | Trade Investment 245000 Creditors 1,10,000 | Current Assets 30000 {Ans.: Proprietary Ratio = 0.67; 1 oF Seinting Ratios 3.111 Calculate Proprietary Ratio, if Total Assets to Debt Ratio is 2: 1. Debt is & 5,00,000. Equity Shares Capital is OS times of debt. Preference Shares Capital is 25% of equity share capital. Net profit before tax is © 10,00,000 and rate of tax is 40%. (CBSE Sample Paper 2020) {Ans.: Proprietary Ratio = 0.912 : 1 or 91.2%) State, with reason, whether the Proprietary Ratio will improve, decline or will not change because of the following transactions if Proprietary Ratio is 0.8 : 1: {@_ Obtained a loan of & 5,00,000 from state Bank of India payable after five years. {i Purchased machinery of % 2,00,000 by cheque. i) Redeemed 7% Redeemable Preference Shares ® 3,00,000. (iy) Issued equity shares to the vendor of building purchased for & 7,00,000, (W) Redeemed 10% redeemable debentures of & 6,00,000. [Ans.: (i) Decline; (ii) No change; (ii) Decline; (iv) Improve (v) Improve.] ulation of Debt to Equity Ratio, Proprietary Ratio, and Total Assets to Debt Ratio From the following information, calculate: (a) Proprietary Ratio; {b) Debt to Equity Ratio; and {c) Total Assets to Debt Ratio. Current Assets %40,00,000 | Current Liabilities %20,00,000 Long-term Borrowings %15,00,000 | Long-term Provisions %25,00,000 Non-current Assets % 40,00,000 {Ansa (a) Proprietary Ratio = 25%; (b) Debt to Equity Ratio = 2: 1; (c) Total Assets to Debt Ratio = 2: 1.] [Hint: Debt = € 40,00,000; Total Assets = T 80,00,000; Proprietors’ Funds/Equity = & 20,00,000.] From the following information, calculate: {a) Proprietary Ratio; {b) Debt to Equity Ratio; and (q) Total Assets to Debt Ratio. Total Debt 18,00,000 | Current Assets %7,50,000 Capital Employed %15,00,000 | Working Capital %1,50,000 {Ans.: (a) Proprietary Ratio = 14.29%; (b) Debt to Equity Ratio = 4 : 1; (c) Total Assets to Debt Ratio = 1.75: 1.] {Hints: 1. Current Liabilities = Current Assets - Working Capital = & 6,00,000. 2. Debt =Total Debts - Current Liabilities = 12,00,000, 3. Total Assets = Capital Employed + Current Liabilities =% 21,00,000) west Coverage Ratio J. If Net Profit before Interest and Tax is & 10,00,000 and interest on Long-term Funds is 2,00,000, find Interest Coverage Ratio. Ans. interest Coverage Ratio = 5 Times.] From the following information, calculate Interest Coverage Ratio: Net Profit after Tax % 4,25,000; Tax % 75,000; Interest on Long-term Funds & 1,25,000. [Ans.: interest Coverage Ratio = 5 Times [Hint: Find Profit before Interest and Tax by adding Profit after Tax, Tax and Interest] |. From the following details, calculate Interest Coverage Ratio: Net Profit after Tax % 7,00,000 6% Debentures % 20,00,000 Tax Rate 30% {CBSE Sample Paper 2019) [Ans.: interest Coverage Ratio = 9.33 Times.)3.112 Analysis of Financial Statem, 70. From the following information, calculate interest Coverage Ratio Net profit after interest and tax & 1,20,000; Rate of income tax; 40%; 15% Debentures & 4 12% Mortgage loan & 1,00,000. (can (Ans Interest Coverage Ratio = a4 z 71. From the following information, calculate Interest Coverage Ratio: 10,000 Equity Shares of € 10 each 8% Preference Shares 10% Debentures Long-term Loans from Bank Interest on Long-term Loans from Bank Net Profit after Tax Tax [An: (Hint: Profit before Interest and Tax is € 94,000 (i.e,, & 75,000 + % 9,000 + % 5,000 + % 5,000) Debt to Capital Employed Ratio 72. From the following information, calculate Debt to Capital Employed Ratio: Shareholders’ Funds Long-term Borrowings (9% Debentures) Current Liabilities Non-current Assets Current Assets 73. From the following information, calculate Debt to Capital Employed Ratio: z 87,00,000 | Cash and Cash Equivalents Capital Employed 4,80,000 | Equity Share Capital Investments Machinery 14,00,000 | 8% Debentures Trade Receivables 8,00,000 | Capital Reserve Surplus, ie,, Balance in Statement of Profit & Loss: (& 1,00,000) 1g, calculate ‘Debt to Capital Employed Rati 74. From the folloy 9% Debentures 8% Public Deposits Long-term Provisions Equity Share Capital Reserves and Surplus 75. Calculate Debt to Capital Employed Ratio from the following informatio Shareholders’ Funds Non-current Liabilities: Long-term Borrowings Long-term Provisions \Non-current Assets: Property, Plant and Equipment and intangible Assets '90,00,000 Non-current investments 1250000 1 Current Assets ee [Ans.: 20,00,000 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 5,00,000.12. calculate Debt to Capital Employed Ratier Capital € §,00,000; Equity Share Capital © 15,00,000 and Surplus © 2,00,000; 9% Loan from OBI & 30,00,000. IPMint: Securities Premium is already included in Reserves and Surplus | From the following Balance Sheet of Varun Ltd. as at 31st March, 2023, calculate Debt to Capital Employed Patio Note Ne t “EQUITY AND LIABILITIES | 1, Shareholders’ Funds {a) Share Capital | 20,00,000 {b)_ Reserves and Surplus | ¥1,00,000 2, Non-Current Liabilities Long-term Borrowings 15,00,000 3. Current Liabilities {a} Short-term Borrowings 5,006,000 {b) Trade Payables |_ 400,000 Total {35.00.000 ASSETS f 1, Non-Current Assets Property, Plant and Equipment and intangible Assets: | {a) Property, Plant and Equipment | 36.00,000 {b) Non-current Investments | 500,006 2. Current Assets (a) Current investments 450,000 (b) inventories | 300,000 (@) Cash and Cash Equivalents 650,000 Total [[55.00.000 (Ans.: 0.33 - 1) 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? {) Sale of Machinery at a loss of & 50,000, (i) Purchase of Stock-in-Trade on credit of two months for & 80,000. {ill) 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 basi {Ans.: (i) Improve, (ii) Not Change, (iil) Reduce, (iv) improve.) tory Turnover Ratio From the following details, calculate Inventory Turnover Ratio: z Cost of Revenue from Operations (Cost of Goods Sold) 9,00,000 Inventory in the beginning of the year 250,000 Inventory at the close of the year 3,50,000 [Ans.: Inventory Turnover Ratio = 3 Times.| 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. (Ans. Inventory Tummover Ratio = 4 Times.) [Hint: Closing Inventory = Opening Inventory + Purchases ~ Cost of Revenue from Operations (Cost of Goods Sold), Calculate inventory Turnover Ratio from the following information: Opening Inventory is % 50,000; Purchases % 3,90,000; Revenue from Operations, ie. Net Sales 6,00,000; Gross Profit Ratio 30%, (Ans.: Inventory Turnover Ratio = 12 Times.) aef Financial Statem, 3.114 Analysis of Fin ents case My 83. From the following information, calculate Inventory Turnover Ratio: Opening Inventory % 2,00,000 | Closing Inventory om Purchases % 4,60,000 | Wages z Boat eInwe 20,000 | Freight Outwards z Carriage inwards {Ans.: Inventory Turnover Ratio = a) 84, Calculate Inventory Turnover Ratio from the following: ’ Opening Inventory Stay Closing Inventory 20% Revenue from Operations, i.e. Net Sales 6.40099 Gross Profit Ratio 25%. (Ans. Inventory Turnover Ratio ay 85. From the following information, calculate Inventory Turnover Ratio: < Revenue from Operations 16,00,009 Average Inventory 2.20009, Gross Loss Ratio 5%. (ethi 2016) (Ans.: Inventory Turnover Ratio = 7.64 Times (Hint: Cost of Revenue from Operations = Revenue from Operations + Gross Loss = 16,00,000 + % 80,000 (ie, 5% of € 16,00,000) = & 1680, Revenue from Operations % 4,00,000; Gross Profit € 1,00,000; Closing Inventory & 1,20,000; Excess of Closing Inventory over Opening Inventory & 40,000. Calculate Inventory Turnover Ratio, Ans. Inventory Turnover Ratio = 3 Time 86. 87. From the following data, calculate Inventory Turnover Ratio: Total Sales ® 10,00,000; Sales Return & 100,000; Gross Profit & 1,80,000; Closing Inventory & 2,00,009, Excess of Closing Inventory over Opening Inventory % 40,000.{Ans.: Inventory Turnover Ratio = 4 Times} £ 2,00,000 is the Cost of Revenue from Operations (Cost of Goods Sold), during the year, if Inventory Turnover Ratio {s 8 times, calculate inventories atthe end of the year. Inventories at the end is 15 times that of in the beginning, (Ans.: Inventory at the end = & 30,000} 59. From the following information obtained from the books of Kundan Ltd,, calculate the Inventory Turnover Ratio for the years 2015-16 and 2016-17: Particulars 2015-16) | 2016-178) Inventory on 31st March 7,00,000| 17,0000 Revenue from Operations (Gross Profit is 25% on Cost of Revenue from Operations) 50,00,000} _75,00,000 |n the year 2015-16, inventory increased by % 2,00,000. (Delhi and Al 2018) (Ans.: Inventory Turnover Ratio: 2015-16 = 90. Calculate Inventory Turnover Ratio from the following information: Opening Inventory % 40,000; Purchases ® 3,20,000; and State, giving reason, which of the followin increase nor decrease the Inventory Turnovel .67 Times; 2016-17 = $ Times} Closing Inventory & 1,20,000. j 9 transactions would (i) increase, (ii) decrease, (ii) neither t Ratio: (a) Sale of goods for = 40,000 (Cost & 32,000). (®) Increase in the value of Closing inventory by % 40,000. (0) Goods purchased for % 80,000, (@) Purchases Return % 20,000, © ) Goods costing ® 10,000 withdrawn for personal use. Goods costing ® 20,000 distributed as free samples, (Ans: ‘nventory Turnover Ratio = 3 Times. (a) Increase: (b) Decrease; () Decrees (A) Increase; (e) Increase; (f)ounting Ratios 3.115 aiiowing figures have been extracted from Shivalika Mills Ltd. toe ory in the beginning of the year % 60,000. IrventOr at the end of the year 1,00,000. ‘ventory Turnover Ratio 8 times. ling price 25% above cost. ute amount of Gross Profit and Revenue from Operations (Net Sales) [Ans.: Gross Profit = % 1,60,000; Revenue from Operations, i.e., Net Sales = % 8,00,000.) from the following Information, calculate Inventory Turnover Ratio: Credit Revenue from Operations 6,00,000; Cash Revenue from Operations % 2,00,000, Gross Profit 25% ‘of Cost, Closing Inventory was 3 times the Opening Inventory. Opening Inventory was 10% of Cost of Revenue from Operations. {Ans.: Inventory Turnover Ratio = 5 Times.) seulation of Opening and Closing Inventory ja. From the following information, calculate value of Opening Inventory: Closing Inventory % 68,000 Total Sales % 4,80,000 (including Cash Sales % 1,20,000) Total Purchases 3,60,000 (including Credit Purchases % 2,39,200) Goods are sold at a profit of 25% on cost. [Ans.: Opening Inventory = % 92,000} In se comp From the following information, determine Opening and Closing Inventories: inventory Turnover Ratio 5 Times, Total Sales ® 2,00,000, Gross Profit Ratio 25%. Closing Inventory is more by 1 4,000 than the Opening Inventory. [Ans.: Opening Inventory = % 28,000; Closing Inventory = % 32,000) Inventory Turnover Ratio 5 times; Cost of Revenue from Operations (Cost of Goods Sold) % 18,90,000. Calculate Opening Inventory and Closing Inventory if Inventory at the end is 2.5 times more than that in the beginning. {Ans.: Opening Inventory = % 1,68,000; Closing Inventory = & 5,88,000.] % 3,00,000 is the Cost of Revenue from Operations (Cost of Goods Sold). Inventory Turnover Ratio 8 times; Inventory in the beginning is 2 times more than the Inventory at the end. Calculate value of Opening and Closing Inventories. (Dethi 2004) (Ans.: Opening Inventory = % 56,250; Closing Inventory = & 18,750.) de Receivables Turnover Ratio 197. Credit Revenue from Operations, ie., Net Credit Sales for the year 12,00,000 Debtors 1,20,000 Bills Receivable 80,000 Calculate Trade Receivables Turnover Ratio. (Ans.: Trade Receivables Turnover Ratio = 6 Times.) Calculate Trade Receivables Turnover Ratio from the following information: ‘Opening Balances ) Closing Balances ) Sundry Debtors 28,000 25,000 Bills Receivable 7,000 15,000 Provision for Doubtful Debts 1,500 4,500 Total Sales & 1,00,000; Sales Return 1,500; Cash Sales 23,500. (Ans.: Trade Receivables Turnover Ratio = 2 Times.) (Hint: Provision for Doubtful Debts is not deducted from Trade Receivables (¢, Debtors + Bills Receivable) to calculate Trade Receivables Turnover Ratio.) Closing Trade Receivables & 90,000, Revenue from Operations ® 7,20,000, Cash Revenue from Operations % 180,000. Provision for Doubtful Debts € 8,000. Calculate Trade Receivables Turnover Ratio. {Ans.: Trade Receivables Turnover Ratio = 6 Times.) Closing Trade Receivables % 1,00,000; Cash Sales being 25% of Credit Sales; Excess of Closing Trade Receivables over Opening Trade Receivables & 40,000; Revenue from Operations, e,, Net Sales % 6,00,000. Calculate Trade Receivables Turnover Ratio. [Ans.: Trade Receivables Turnover Ratio = 6 Times.]3.116 Analysis of Financial Statement, 8s 101 pute Trade Receivatsles Turnover Ratio from the following Ast March, 2022 (8) Nt hn Revenue from Operations (Net Sales) 4,00,000 han, Debtors in the beginning of year 63,000 00) , natant 1,17,000 "700 Sales Retu 1,00,000 8,009 [Ans.: 31st March, 2022 » 8 Times; 31st March, an 102. Closing Trade Receivables & 1,20,000, Revenue from Operations & 14,40,000, Provision for Doyy Mh © 20,000. Calculate Trade Receivables Turnover RatioAns.: Trade Receivables Turnover Ratio « 45/04 103. Closing Trade Receivables & 4,00,000; Cash Sales being 25% of Credit Sales; Excess of Ol a Receivables over Opening Tade Receivables 2,00,000; Revenuse from Operations, Le, Net Sales ¢ yt Calculate Trade Receivables Turnover Ratio, (Ans. Trade Receivables Turnover Ratio» 4 Tine | (Hints: 1, Net Credit Sales = Total Sales ~ Cash Sales % 15,00,000 - 20% of & 15,00,000 = & 12,00,000, 2. Opening Trade Receivables = Closing Trade Receivables ~ Excess of Clo wae over eeaaiean Trade Receivables.) S199 Trade Recta 104. A firm normally has Trade Receivables equal to two months’ Credit Sales. During the com expects Credit Sales of & 7,20,000 spread evenly over the year (12 months). What is the eget amount of Trade Receivables at the end of the year? (Ans. Estimated Trade Receivables = ® 1299 105. Mercury Ltd. made Credit Sales of & 400,000 during the financial period. I the collection per, 36 days and year is assumed to be 360 days, calculate: is (i) Trade Receivables Turnover Ratio; (ii) Average Trade Receivables; (i Trade Receivables at the end when Trade Receivables atthe end are more than thatin the beging by %6,000. ans. (i) Trade Receivables Turnover Ratio = 10 Times; (li) Average Trade Receivab (ii) Trade Receivables in the beginning = 37,000; Trade Receivables at the end 106. Calculate Trade Receivables Turnover Ratio in each of the following alternative cases: Case 1: Net Credit Sales % 4,00,000; Average Trade Receivables & 1,00,000. Case 2: Revenue from Operations (Net Sales) % 30,00,000; Cash Revenue from Operations, ie, Cash Sales & 6,00,000; Opening Trade Receivables % 2,00,000; Closing Trade Receivables & 600000 Cost of Revenue from Operations or Cost of Goods Sold & 3,00,000; Gross Profit on Cost 25%; Cash Sales 20% of Total Sales; Opening Trade Receivables ® 50,000; Closing Trade Receivables % 100,000. Case 4: Cost of Revenue from Operations or Cost of Goods Sold % 4,50,000; Gross Profit on Sale 20%; Cash Sales 25% of Net Credit Sales, Opening Trade Receivables ® 90,000; Closing Tade Receivables ® 60,000. d ans.: Case 1: Trade Receivables Tumover Ratio = 4 Times; Case 2: Trade Receivables Turnover Ratio = 6 Times Case 3: Trade Receivables Turnover Ratio = 4 Times; Case 4: Trade Receivables Turnover Ratio = 6 Tint) 107. From the information given below, calculate Trade Receivables Turnover Ratio: Credit Revenue from Operations, ie, Credit Sales ® 8,00,000; Opening Trade Receivables & 1,20,000;and Closing Trade Receivables & 2,00,000. State, giving reason, which of the following would increase, decrease or not change Trade Receivables Case 3: Turnover Ratio: (i) Collection from Trade Receivables & 40,000. (il) Credit Revenue from Operations, ie., Credit Sales % 80,000. (iii) Sales Return % 20,000. (iv) Credit Purchase @ 1,60,000. (Ans.: Trade Receivables Turnover Ratio = 5 Times; () Increase; (i) Decrease; (li) Increase; (W) NOting Ratios 3.117 nn of Opening and Closing Trade Receivables 11,758,000 is the Credit Revenue from Operations, Le, Net Credit Sales of an enterprise. I Tradke Receivable TurMover Ratio is 8 times, calculate Trade Receivables in the beginning and at the end of the year. Trade Freceivables at the end is € 7,000 more than that in the beginning. {Ans.: Trade Receivables in the beginning = € 18,375; Trade Receivables at the end = ¥ 25.375 From the following information, calculate Opening and Closing Trade Receivables, if Trade Receivable Tumover Ratio is 3 Times: { Cash Revenue from Operations is 1/3rd of Credit Revenue from Operations. {i Cost of Revenue from Operations is & 3,00,000. © Gi) Gross Profit is 25% of the Revenue from Operations iv) Trade Receivables at the end are 3 Times more than that of in the begining. [Ans.: Opening Trade Receivables = % 40,000; Closing Trade Receivables = ® 1,60,000. Cash Revenue from Operations (Cash Sales) % 2,00,000, Cost of Revenue from Operations or Cost of ‘Goods Sold & 3,50,000; Gross Profit & 1,50,000; Trade Receivables Turnover Ratio 3 Times. Calculate ‘Opening and Closing Trade Receivables in each of the following alternative cases: Case 1: If Closing Trade Receivables were % 1,00,000 in excess of Opening Trade Receivables. Case 2: If Trade Receivables at the end were 3 times than in the beginning, Case 3: If Trade Receivables at the end were 3 times more than that of in the beginning. [Ans.: Opening Trade Receivables (%) Closing Trade Receivables (%) Case 1. 50,000 150,000 Case 2: 50,000 1,50,000 Case 3: 40,000 1,60,000) Payables Turnover Ratio Calculate Trade Payables Turnover Ratio and Average Debt Payment Period from the following information: Ist April, 2022 @) 31st March, 2023 (®) Sundry Creditors 1,50,000 4,50,000 Bills Payable 50,000 1,50,000 Total Purchases % 21,00,000; Purchases Return & 1,00,000; Cash Purchases & 4,00,000. (Ans.: Trade Payables Turnover Ratio = 4 Times; Average Debt Payment Period = 3 Months.) Calculate Trade Payables Turnover Ratio from the following information: Opening Creditors % 1,25,000; Opening Bills Payable & 10,000; Closing Creditors % 90,000; Closing Bills Payable % 5,000; Purchases & 9,50,000; Cash Purchases % 1,00,000; Purchases Return % 45,000. [Ans.: Trade Payables Turnover Ratio = 7 Times.] Calculate Trade Payables Turnover Ratio for the year 2022-23 in each of the alternative cases: Closing Trade Payables % 45,000; Net Purchases & 3,60,000; Purchases Return % 60,000; Cash Purchases & 90,000. Opening Trade Payables % 15,000; Closing Trade Payables t 45,000; Net Purchases & 3,60,000. Closing Trade Payables & 45,000; Net Purchases & 3,60,000. Closing Trade Payables (including % 25,000 due to a supplier of machinery) € 55,000; Net Credit Purchases & 3,60,000. {Ans.: Trade Payables Turnover Ratio = (1) 6 Times; (2) 12 Times; (3) 8 Times; (4) 12 Times) {Hint: Case 4; A creditor for machinery has been excluded since he does not arise from the purchase ‘of goods in which the firm deals in.) Glosing Trade Payables ® 5,40,000, Net Purchases % 43,20,000, Cash Purchases & 10,80,000. Calculate frade Payables Turnover Ratio. [Ans.: Trade Payables Turnover Ratio = 6 Times.) eoP Analysis of Financial State 3.118 Calculation of Opening and Closing Trade Payables he following Information, calculate Opening and Closing Trade Payables: Cash Purchases 25% of Total Purchases; Revenue from Operations & 3,00,000; oe Revenve from Operations: Opening Inventory © 75,000; Closing Inventory © 1,50,000; Trage 25m: mover Roto 8 Times, Closing Trade Payables were € 75,000 in excess of Opening Trae ep A {Ans.: Opening Trade Payables & 37,500; Closing Trade Payables Uy: Hints: 1. Cost of Revenue from Operations = & 2,25,000. Cost of Revenue from Operations + Closing Inventory - Opening % 225,000 + & 1,50,000 - & 75,000 = % 3,00,000. 118. From 2. Total Purchases 3. Net Credit Purchases = Total Purchases - Cash Purchases = % 3,00,000 ~ & 75,000 = & 2,25,000.] Working Capital Turnover Ratio 116. Calculate Working Capital Turnover Ratio from the following information: ; Revenue from Operations 24.00.09 Current Assets 10, Current Liabilities 4.0000) (AMS: 4 Time 117. From the following information, calculate Working Capital Turnover Ratio: z Cost of Revenue from Operations (Cost of Goods Sold) 000% Current Assets 250009 Current Liabilities 15000 {Ans.: Working Capital Turnover Ratio = 5 Times} Revenue from Operations: Cash Sales & 5,00,000; Credit Sales % 6,00,000; Sales Return & 1,00009, Current Assets & 3,00,000; Current Liabilities & 1,00,000. Calculate Working Capital Turnover Ratio, {Ans.: Working Capital Turover Ratio = 5 Times) 118. 119. Equity Share Capital & 15,00,000; Gross Profit on Revenue from Operations, ie., Net Sales 332¢ Cost of Revenue from Operations or Cost of Goods Sold % 20,00,000; Current Assets % 10,00,000; Current Liabilities % 2,50,000. Calculate Working Capital Turnover Ratio. [Ans.: Working Capital Turnover Ratio = 4 Times] 120. Gross Profit at 25% on cost; Gross Profit € 5,00,000; Equity Share Capital & 10,00,000; Reserves and Surplus ® 2,00,000; Long-term Loan % 3,00,000; Fixed Assets (Net) % 10,00,000. Calculate Working Capital [Ans.: Working Capital Turnover Ratio = 5 Times] Turnover Ratio. Hint: Working Capital = % 5,00,000; Total Sales = % 25,00,000 Capital Employed % 12,00,000; Net Fixed Assets ® 8,00,000; Cost of Goods Sold or Cost of Revenue fam Operations 40,00,000; Gross Profit is 20% on Cost. Calculate Working Capital Turnover Ratio. [Ans.: Working Capital Turnover Ratio = 12 121. [Hint: Working Capital = Capital Employed ~ Net Fixed Assets.] 122. Calculate Working Capital Turnover Ratio from the following information: Revenue from Operations % 15,00,000; Current Assets & 6,25,000; Total Assets % 10,00,000; No! abilities ® 5,00,000, Shareholders’ Funds % 2,50,000. [Ans.: Working Capital Turnover Ratio = 4 123. A company earns Gross Profit of 25% on cost. For the year ended 31st March, 2017 Its Profit was % 5,00,000; Equity Share Capital of the company was ® 10,00,000; Reserves and % 2,00,000; Long-term Loan ® 3,00,000 and Non-current Assets were & 10,00,000, (Delhi and Al Compute the ‘Working Capital Turnover Ratio’ of the company. {Ans.: Working Capital Turnover Ratio = 5ae Ratios 3.119 Turnover Ratio Fixed Assets © 5,00,000, Revenue from Operations © 25,00,000. Calculate Fixed Assets Turnove Anas: $ Times ‘Assets (at Cost) % 7.00,000, Accumulated Depreciation & 1,00,000, Credit Revenue from Operations 117,00,000, Cash Revenue from Operations & 1,00,000. Calculate Fixed Assets Turnover Ratio. [ans Employed & 250,000, Working Capital € 50,000, Cost of Revenue from Operations © §,00,000, Profit € 2,00,000. Calculate Fixed Assets Tumover Ratio. ‘Ans.: 5 Times information is of Raja Ltd. for 2 years. Calculate Fixed Assets Turnover Ratio: 2021-22 2022-23 z g Assets at written down value 3,00,000 6,00,000 of Revenue from Operations 12,00,000 18,00,000 (Ans.: 2021-22: 4 Times; 2022-23: 3 Times) Employed % 30,00,000; Working Capital & 5,00,000; Cost of Revenue from Operations € 40,00,000: Profit 25% of Cost. Calculate Fixed Assets Turnover Ratio. {Ans.: 2 Times.) is Turnover Ratio ‘on the following information, calculate Net Assets or Capital Employed Turnover Ratio: ‘Shareholders’ Funds Z 20,00,000; Equity Share Capital € 10,00,000; Reserves and Surplus & 10,00,000; "B% Debentures T 10,00,000 and Revenue from Operations € 75,00,000. (ans.: 2.5 Times.) Hint: In the absence of information on assets and current liabilities, the ratio can be calculated based ‘on Capital Employed. Net Assets Turnover Ratio is also known as Capital Employed Turnover Ratio.) Property, Plant and Equipment and Intangible Assets (at cost) & 30,00,000; Accumulated Depreciation 500,000; Trade Investments % 2,50,000; Current Assets & 11,00,000; Current Liabilities € 8,50,000; Cash Revenue from Operations % 10,00,000; Credit Revenue from Operations & 40,00,000. “Galculate Net Assets Turnover Ratio. {Ans.: 1.67 Times] Fixed Assets T 10,00,000; Working Capital % 5,00,000; Cost of Revenue from Operations & 50,00,000; Gross Profit 20% of Cost. Calculate Net Assets or Capital Employed Turnover Ratio. [Ans.: 4 Times.) Shareholders’ Funds % 10,00,000; Long-term Debts & 20,00,000; Gross Profit at 20% on cost was % 20,00,000. Calculate Net Assets or Capital Employed Turnover Ratio. [Ans.: 4 Times] From the following Balance Sheet of Akhil Ltd. as at 31st March, 2023, calculate (i) Net Assets Turnover Ratio and (ji) Fixed Assets Turnover Rati Note No. z ‘AND LIABILITIES |. Shareholders’ Funds {a) Share Capital 10,00,000 {b) Reserves and Surplus 3,00,000 Non-Current Liabilities Long-term Borrowings: —8% Debentures Current Liabilities (2) Trade Payables {b) Other Current Liabilities3.120 Analysis of Finanel ASSETS 1. Non-Current Assets Property Plant and Property, Plant and Equipment (Net of Depreciation) 2. Current Assets: (a) Inventories pment and intangible Assets, ib) Trade Receivables ©) Cash and Cash Equivalents Total : x Revenue from Operations for the year was € 45,00,000. (Ans. ()) 2.5 Times and (ip a7 Ts 1 Gross Profit Ratio 134, From the following, calculate Gross Profit Ratio: Gross Profit: € 50,000; Revenue from Operations € 5,00,000; Sales Return: % 50,000, (Ans. Gross Profit Rai gy 135. Compute Gross Profit Ratio from the following information Cost of Revenue from Operations (Cost of Goods Sold) & 5,40,000; Revenue from Operati (Net Sales) & 6,00,000. [Ans.: Gross Profit Ratio = ‘omy 136. Compute Gross Profit Ratio from the following information: Revenue from Operations, /e,, Net Sales = % 4,00,000; Gross Profit 25% on Cost. (em (Ans.: Gross Profit Ratio = 204) 137. Calculate Gross Profit Ratio from the following data: Cash Sales are 20% of Total Sales; Credit Sales are & 5,00,000; Purchases are & 4,00,000; Excess of Clos) Inventory over Opening Inventory & 25,000. 138. From the following information, calculate Gross Profit Ratio: Credit Sales % 10,00,000 | Decrease in Inventory Purchases % 6,00,000 | Returns Outward Carriage Inwards % 20,000 | Wages 100000 Rate of Credit Sale to Cash Sale [Ans.: Gross Profit Ratio = 42.4%) 139. From the following information, calculate Gross Profit Rati g Revenue from Operations: Cash 2,00,000 | Carriage Inwards Credit 8,00,000 | Salaries Purchases: Decrease in Inventory Cash 40,000 | Returns Outwards Credit 3,60,000 | Wages [Ans.: Gross Profit Ratio = 4 (Hint: Revenue from Operations means Net Sales.) 140. Opening Inventory ® 2,00,000; Closing Inventory ® 1,20,000. Inventory Turnover Ratio 8 Times; price 25% above cost. Calculate Gross Profit Ratio. [Ans.: Gross Profit Ratio = 141. A Trader carries an Average Inventory of % 1,00,000. His Inventory Turnover Ratio is 8 Times. He goods at a profit of 25% of cost. Calculate Gross Profit Ratio. {Ans.: Gross Profit Ratio = 142. Calculate Gross Profit Ratio from the following data: Average Inventory & 3,20,000; Inventory Turnover Ratio 8 Times; Average Trade Receivables © Trade Receivables Turnover Ratio 6 Times; Cash Sales 25% of Net Sales. [Ans.: Gross Profit Ratio =Operations: Cath Sater # trem Oneet 4,20,000; Credit Sates # 6,00,000 Retur atlons OF Cost of Good T Of Goods Sole € 8,00,000. Calculate Girone ft Ratio over Ratio 6 Times: Selling Price 25% abowe cost. Cl tory © 1,00,000; Closin ala 10 Inventory & 60, t © 25% above cost. Calculate Y % 60,000; inventory Tur Gross Profit Ratio, 20%: (i) Gross Profit Ratio = 20%; ji) Gross Profit Ratio ~ 20% Ratio of ® COMPANY IS 25%, State b) decrease oF (c) not alter the ¢ Laces of Stock-in-Trade & 50,000, nases Return © 15,000, |Ans.: (i) Gross Profit Ratio GIVING reason, which of the following transactions il! 51088 Profit Ratio: sale of Stock-in-Trade & 40,000, ockin Trade costing & 20,000 withdrawn for personal use stock in-Trade costing & 15,000 distributed as free sample, tans.: (i)-(v), No Change erating Ratio gevenue from Operations & 12,00,000, Cost of 00,000. Calculate Operating Ratio. Revenue from Operations & 5,00,000. Operating Cos {Ans.: Operating Ratio = 50% of Revenue from Operations (Cost of Goods Sold) & 3,00,000, Operating Expenses & 1,20,000. Revenue Operations: Cash Sales & 5,20,000; Return & 20,000. Calculate Operating Ratio. (NCEAT, Modified) [ans.: Operating Ratio = 84% operating Ratio 92%; Operating Expenses & 94,000; Revenue from Operations & 6,00,000; Sales Return £40,000. Calculate Cost of Revenue from Operations (Cost of Goods Sold). (Ans.: Cost of Revenue from Operations (Cost of Goods Sold) = ® 4,58,000.) [Hint: Sales Return will not be considered since Revenue from Operations is net sales.) . From the following information, calculate Operating Ratio: Cost of Revenue Revenue from Operations: from Operations (Cost of Goods Sold) %52,000 | Gross Sales % 88,000 Operating Expenses %18,000 | Sales Return 78,000 tAns.: Operating Ratio = 87.5%.) . Calculate Cost of Revenue from Operations from the following information: Revenue from Operations % 12,00,000; Operating Ratio 75%; Operating Expenses @ 1,00,000. [Ans.: Cost of Revenue from Operations = ® 8,00,000.) 4150. Calculate Operating Ratio from the following information: Operating Cost % 6,80,000; Gross Profit 25%; Operating Expenses % 80,000. [Ans.: Operating Ratio = 85%.) (Hints: 1. Operating Cost = Cost of Revenue from Operations + Operating Expenses. % 6,80,000 = Cost of Revenue from Operations + % 80,000 Cost of Revenue from Operations = % 6,00,000, 2. Revenue from Operations = & 6,00,000 x 100/75 = & 8,00,000 (i) Cost of Revenue from Operations (Cost of Goods Sold) & 2,20,000; Revenue from Operations (Net Sales) % 3,20,000; Selling Expenses % 12,000; Office Expenses & 8,000; Depreciation & 6,000. Calculate Operating Ratio. \\) Revenue from Operations, Cash Sales & 4,00,000; Credit Sales & 1,00,000; Gross Profit & 1,00,000; Office and Selling Expenses ® 50,000, Calculate Operating Ratio, _[Ans.:()) 76.875%; (i) 90%.] ‘Hint (i) Operating Expenses = Selling Expenses + Office Expenses + Depreciation.)3.122 Analysis of Financial Statement, Sige My Operating Profit Ratio 152. Calculate Operating Profit Ratio from the following: Revenue from Operations (Net Sales) Cost of Revenue from Operations (Cost of Goods Sold) Wages Office and Administrative Expenses interest on Borrowings 5 [Ans.: Operating Profit Rati 10 = 5) ssiii~ 153. Calculate Operating Profit Ratio from the following information: Opening Inventory %1,00,000 | Closing Inventory vist Purchases %10,00,000 | Loss by fire 20g Revenue from Operations, ie, Net Sales. %14,70,000 | Dividend Received ta Administrative and Selling Expenses %1,70,000 (Ans.: Operating Profit Rato= 2375) 154, Revenue from Operations ® 9,00,000; Gross Profit 25% on Cost; Operating Expenses & 45,000. Calculate Operating Profit Ratio. [Ans.: Operating Profit Ratio = 15%) 155. Operating Cost & 3,40,000; Gross Profit Ratio 20%; Operating Expenses X 20,000. Calculate Opera Profit Ratio. (Ans.: Operating Profit Ratio = 1594 156. What will be the Operating Profit Ratio, if Operating Ratio is 82.59%? (Foreign 205 [Ans.: Operating Profit Ratio = 17.41%) 157. Calculate Operating Profit Ratio in each of the following alternative cas Case 1: Revenue from Operations (Net Sales) € 20,00,000; Operating Profit € 3,00,000. Revenue from Operations (Net Sales) € 6,00,000; Operating Cost & 5,10,000. Case 2: Case 3: Revenue from Operations (Net Sales) & 3,60,000; Gross Profit 20% on Sales; Operating Expenses % 18,000, Case 4: Revenue from Operations (Net Sales) % 4,50,000; Cost of Revenue from Operations & 3,60,000; Operating Expenses € 22,500. Case 5: Cost of Goods Sold, ie,, Cost of Revenue from Operations € 4,00,000; Gross Profit 20% on Sales; Operating Expenses % 25,000. [Ans.: Case 1 = 15%; Case 2 = 15%; Case 3 = 15%; Case 4 = 15%; Case 5 = 15%) 158. Operating Profit Ratio of Star Ltd, is 20%. State, giving reason, which of the following transactions will {i increase, (i) decrease, or (ii) not alter the Operating Profit Ratio: (a) Purchase of Stock-in-Trade 1,00,000. (b) Purchase returns 20,000. (Q) Revenue from Operations on sale of Stock-in-Trade % 1,25,000. (d) Stock-in-Trade costing % 25,000 withdrawn for personal use. Assuming that operating cost is variable, i.e, varies with Revenue from Operations. [Ans.: (a) No change; (b) No change; (c) No change; (d) No change Net Profit Ratio 159. Cash Sales % 2,20,000; Credit Sales T 3,00,000; Sales Return & 20,000; Gross Profit € 1,00,000;, one late Expenses % 25,000; Non-operating Incomes % 30,000; Non-operating Expenses € 5,000. Calcul Profit Ratio. [Ans.: Net Profit Ratio = 160. Revenue from Operations, ie,, Net Sales & 12,00,000; Net Profit & 1,20,000. Calculate Net Profit Ratio [ans.: Net Profit Ratio = 10%) 161. Revenue from Operations, /e,, Net Sales ¥ 8,20,000; Return & 10,000; Cost of Revenue from Operations (Cost of Goods Sold) ® 5,20,000; Operating Expenses & 2,09,000; Interest on Debentures & 40:50 Gain (Profit) on Sale ofa Fed Asset ® 81,000, Calculate Net Profit Ratio. (Ans.: Net Profit Ratio = 1604%!)