Accounting Ratios-II
NUMERICAL QUESTION
1. Following is the Balance Sheet of Raj Oil Mills Limited as at March 31 ,2017 . Calculate current ratio.
| Particulars | (Rs.) |
| I. Equity and Liabilities: | |
| 1. Shareholders’ funds | |
| a) Share capital | 7,90,000 |
| b) Reserves and surplus | 35,000 |
| 2. Current Liabilities | |
| a) Trade Payables | 72,000 |
| Total | 8,97,000 |
| II. Assets | |
| 1. Non-current Assets | |
| a) Fixed assets | |
| Tangible assets | 7,53,000 |
| 2. Current Assets | |
| a) Inventories | 55,800 |
| b) Trade Receivables | 28,800 |
| c) Cash and cash equivalents | 59,400 |
| Total | 8,97,000 |
2. Following is the Balance Sheet of Title Machine Ltd. as at March 31, 2017.
| Particulars | Amount (Rs.) |
| I. Equity and Liabilities | |
| 1. Shareholders’ funds | |
| a) Share capital | 24,00,000 |
| b) Reserves and surplus | 6,00,000 |
| 2. Non-current liabilities | |
| a) Long-term borrowings | 9,00,000 |
| 3. Current liabilities | |
| a) Short-term borrowings | 6,00,000 |
| b) Trade payable | 23,40,000 |
| c) Short-term provisions | 60,000 |
| Total | 69,00,000 |
| II. Assets | |
| 1. Non-current Assets | |
| a) Fixed assets | |
| Tangible assets | 45,00,000 |
| 2. Current Assets | |
| a) Inventories | 12,00,000 |
| b) Trade receivables | 9,00,000 |
| c) Cash and cash equivalents | 2,28,000 |
| d) Short-term loans and advances | 72,000 |
| Total | 69,00,000 |
3. Current Ratio is 3.5:1. Working Capital is Rs 90,000. Calculate the amount of Current Assets and Current Liabilities.
4. Shine Limited has a current ratio 4.5:1 and quick ratio 3:1; if the inventory is 36,000, calculate current liabilities and current assets.
5. Current liabilities of a company are Rs 75,000. If current ratio is 4:1 and liquid ratio is 1:1, calculate value of current assets, liquid assets and inventory.
6. Handa Ltd.has inventory of Rs 20,000. Total liquid assets are Rs 1,00,000 and quick ratio is 2:1. Calculate current ratio.
7. Calculate debt equity ratio from the following information:
| Rs | |
| Total Assets | 15,00,000 |
| Current Liabilities | 6,00,000 |
| Total Debts | 12,00,000 |
8. Calculate Current Ratio if:
Inventory is Rs 6,00,000; Liquid Assets Rs 24,00,000; Quick Ratio 2:1.
9. Compute Stock Turnover Ratio from the following information:
| Net Revenue from Operations | Rs. 2,00,000 |
| Gross Profit | Rs. 50,000 |
| Inventory at the end | Rs. 60,000 |
| Excess of inventory at the end over inventory in the beginning | Rs. 20,000 |
10. Calculate following ratios from the following information:
(i) Current ratio (ii) Acid test ratio (iii) Operating Ratio (iv) Gross Profit Ratio
| Current Assets | Rs. 35,000 |
| Current Liabilities | Rs. 17,500 |
| Inventory | Rs. 15,000 |
| Operating Expenses | Rs. 20,000 |
| Revenue from Operations | Rs. 60,000 |
| Cost of Goods Sold | Rs. 30,000 |
11.From the following information calculate:
(i) Gross Profit Ratio (ii) Inventory Turnover Ratio (iii) Current Ratio (iv) Liquid Ratio (v) Net Profit Ratio (vi) Working capital Ratio:
| Revenue from Operations | Rs. 25,20,000 |
| Net Profit | Rs. 3,60,000 |
| Cast of Revenue from Operations | Rs. 19,20,000 |
| Long-term Debts | Rs. 9,00,000 |
| Trade Payable | Rs. 2,00,000 |
| Average Inventory | Rs. 8,00,000 |
| Current Assets | Rs. 7,60,000 |
| Fixed Assets | Rs. 14,40,000 |
| Current Liabilities | Rs. 6,00,000 |
| Net Profit before Interest and Tax | Rs. 8,00,000 |
12. Compute Gross Profit Ratio, Working Capital Turnover Ratio, Debt Equity Ratio and Proprietary Ratio from the following information:
| Paid-up Share Capital | Rs. 5,00,000 |
| Current Assets | Rs. 4,00,000 |
| Revenue from Operations | Rs. 10,00,000 |
| 13% Debentures | Rs. 2,00,000 |
| Current Liabilities | Rs. 2,80,000 |
| Cost of Revenue from Operations | Rs. 6,00,000 |
Inventory in the beginning is Rs. 76,250, Inventory at the end is 98,500, Gross Revenue from Operations is Rs. 5,20,000, Sales Return is Rs. 20,000, Purchases is Rs. 3,22,250.
14. Calculate Inventory Turnover Ratio from the data given below:
| Inventory in the beginning of the year | Rs. 10,000 |
| Inventory at the end of the year | Rs. 5,000 |
| Carriage | Rs. 2,500 |
| Revenue from Operations | Rs. 50,000 |
| Purchases | Rs. 25,000 |
15. A trading firm’s average inventory is Rs 20,000 (cost). If the inventory turnover ratio is 8 times and the firm sells goods at a profit of 20% on sale, ascertain the profit of the firm.
16. You are able to collect the following information about a company for two years:
2015-16 | 2016-17 | |
Trade receivables on Apr. 01 | Rs.4,00,000 | Rs.5,00,000 |
Trade receivables on Mar. 31 | Rs.5,60,000 | |
Stock in trade on Mar. 31 | Rs.6,00,000 | Rs.9,00,000 |
Revenue from operations (at gross profit of 25%) | Rs.3,00,000 | Rs. 24,00,000 |
Calculate Inventory Turnover Ratio and Trade Receivables Turnover Ratio.
17. From the following Balance Sheet and other information, calculate following ratios:
(i) Debt-Equity Ratio (ii) Working Capital Turnover Ratio (iii) Trade Receivables Turnover Ratio
Balance Sheet as at March 31, 2017
Particulars | Note No. | Rs. |
I. Equity and Liabilities: | ||
1. Shareholders’ funds | ||
a) Share capital | 10,00,000 | |
b) Reserves and surplus | 9,00,000 | |
2. Non-current Liabilities | ||
Long-term borrowings | 12,00,000 | |
3. Current Liabilities | ||
Trade payable | 5,00,000 | |
Total | 36,00,000 | |
II. Assets | ||
1. Non-current Assets | ||
a) Fixed assets | ||
Tangible assets | 18,00,000 | |
2. Current Assets | ||
a) Inventories | 4,00,000 | |
b) Trade Receivables | 9,00,000 | |
c) Cash and cash equivalents | 5,00,000 | |
Total | 36,00,000 |
Additional Information: Revenue from Operations Rs. 18,00,000
18. From the following information, calculate the following ratios:
i) Quick Ratio
ii) Inventory Turnover Ratio
iii) Return on Investment
| Rs. | |
| Inventory in the beginning | 50,000 |
| Inventory at the end | 60,000 |
| Revenue from operations | 4,00,000 |
| Gross Profit | 1,94,000 |
| Cash and Cash Equivalents | 40,000 |
| Trade Receivables | 1,00,000 |
| Trade Payable | 1,90,000 |
| Other Current Liabilities | 70,000 |
| Share Capital | 2,00,000 |
| Reserves and Surplus | 1,40,000 |
(Balance in the Statement of Profit & Loss A/c)
19. From the following, calculate (a) Debt Equity Ratio (b) Total Assets to Debt Ratio (c) Proprietary Ratio.
| Rs. | |
| Equity Share Capital | 75,000 |
| Preference Share Capital | 25,000 |
| General Reserve | 45,000 |
| Balance in the Statement of Profits and Loss | 30,000 |
| Debentures | 75,000 |
| Trade Payables | 40,000 |
| Outstanding Expenses | 10,000 |
20. Cost of Revenue from Operations is Rs 1,50,000. Operating expenses are Rs 60,000. Revenue from Operations is Rs 2,50,000. Calculate Operating Ratio.
21. Calculate the following ratio on the basis of following information:
(i) Gross Profit Ratio (ii) Current Ratio (iii) Acid Test Ratio (iv) Inventory Turnover Ratio (v) Fixed Assets Turnover Ratio
| Rs. | |
| Gross Profit | 50,000 |
| Revenue from Operations | 100,000 |
| Inventory | 15,000 |
| Trade Receivables | 27,500 |
| Cash and Cash Equivalents | 17,500 |
| Current Liabilities | 40,000 |
| Land & Building | 50,000 |
| Plant & Machinery | 30,000 |
| Furniture | 20,000 |
22. From the following information calculate Gross Profit Ratio, Inventory Turnover Ratio and Trade Receivables Turnover Ratio.
| Rs. | |
| Revenue from Operations | 3,00,000 |
| Cost of Revenue from Operations | 2,40,000 |
| Inventory at the end | 62,000 |
| Gross Profit | 60,000 |
| Inventory in the beginning | 58,000 |
| Trade Receivables | 32,000 |
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