PRACTICE NUMERICALS

From this balance sheet calculate following ratios:

Quick ratio =1096449+127055+8399+423649=1655552=0.63 OR 63%
2614984 2614984

Cash ratio =423649=0.16 OR 16%

2614984

Debt to Equity Ratio Longterm Debt value not given in balance sheet
Total Asset to Debt Ratio Longterm Debt value not given in balance sheet
Proprietary Ratio =5281097=0.643 OR 64% Shareholder’s equity(243597+5037500)
8211918

From above income statements calculate

 Operating Profit Ratio=Operating profit/Net sales =764852*100 =8.1%
9340031
Operating Expense Ratio=Operating Expense/Net sales =699469*100=7.4%
9340031
Net profit Ratio=Net profit/Net sales =189334*100=2.0%
9340031
Interest Coverage Ratio=EBIT/Interest on long term loan =764852 =1.54
495809
Debt Service Ratio=EAIT+ interest (finance cost) =189334+495809=1.38
Interest on long term loan + Installments 495809+0

Calculate
Gross profit/loss ratio=Gross loss/Net sales =(4061128)*100=(2.29%)
176754542
Net Profit/loss ratio=Net loss/net sales =(5385239)*100=(3.04%)
176754542
Operating profit/loss ratio=Operating loss/Net sales =(2168156)*100=(1.22%)
176754542
Operating expense ratio=Operating expense/Net sales =746332*100=0.42%
176754542

Based on the information given in above

statements Calculate following ratios
Return on Assets Ratio ROA = Net Income *100 =(1324.46)*100=(3.94% )
Average Total Assets 33614.01

Calculation Avg Total Assets

(37332.84+29895.18)/2=33614.01

Return on Equity Ratio ROE = Net Income* 100 =(1324.46)*100=(12.85)%

Average Equity Fund 10299.23

Calculation Avg Equity fund

4841.13+4873.15=9714.28 (2020 Equity fund) 9714.28+10884.19=20598.47/2=10299.23
4841.13+6043.06=10884.19(2019 Equity fund)

Return on Capital ROCE = Earning Before Interest and Taxes = (1469.16) = (0.059)
Employed Ratio Total Capital Employed 24791.77

Calculation Total Capital Emp

21601.81(Total Equity)+3189.96(Longterm debt)=24791.77

Total asset turnover Total Assets Turnover Ratio = Net Sales = 5832.95 = 0.173
Average Total Assets 33614.01

Calculation Avg Total Assets

(37332.84+29895.18)/2=33614.01
Cash turnover Cash Turnover Ratio = Net sales =5832.95=71.93
Average Cash & Cash equivalents 81.09

Calculation Avg Cash &Eq

(90.87+71.31)/2=81.09

Accounts receivable A/R Turnover Ratio = Net Credit Sales Net credit sales not available
turnover Average A/C Receivables

Account payable A/Payables Turnover Ratio = Net Credit Purchase Net credit purchase not available
turnover Average A/C Payables

Inventory/Stock turnover Inventory Turnover Ratio = Cost of Goods Sold =6349.36=3.19

Average Inventories/Stock 1622.09

Calculation Avg Inventories

(1450.01+1794.18)/2=1622.09

Working capital turnover Working Capital Turnover Ratio = Net Sales = 5832.95= (1.55)
Net Working Capital (3746.18)

Calculation Net working Capital

(CA-CL=2455.78-6201.96)=-3746.18

SHORT NUMERICALS
Compute the inventory turnover ratio and average selling period from the following data of a trading
company:

 Sales: $75,000
 Gross profit: $35,000
 Opening inventory: $9,000
 Closing inventory: $7,000

 Solution:
 $40,000* / $8,000**
 5 times

 Computation of cost of goods sold and average inventory:

 *$75,000 – $35,000 = $40,000
**($9,000 + $7,000) / 2

2. The ABC trading company provides you the following data for the year 2016:

 Inventory turnover ratio: 12 times

 Opening inventory at cost: $36,000
 Closing inventory at cost: $54,000

Calculate cost of goods sold for the year 2016.

Solution

Inventory turnover ratio = Cost of goods sold/Average inventory at cost

12 times = Cost of goods sold/$45,000*
Cost of goods sold = $45,000 × 12 times
= $540,000

*($36,000 + $54,000)/2 `
 Use the following information to answer items 5 - 7:
At December 31 a company's records show the following information:

1. The company's working capital is

$60,000
 
$66,000
 
$196,000
2. The company's current ratio is
1.0 : 1
 
2.0 : 1
 
2.1 : 1
3. The company's quick ratio is
0.7 : 1
 
1.0 : 1
 
2.0 : 1

Use the following information to answer items 8 - 11:

For its most recent year a company had Sales (all on credit) of $830,000 and Cost of Goods Sold of $525,000. At the
beginning of the year its Accounts Receivable were $80,000 and its Inventory was $100,000. At the end of the year
its Accounts Receivable were $86,000 and its Inventory was $110,000.

1. The inventory turnover ratio for the year was

4.8
 
5.0
 
7.9
2. The accounts receivable turnover ratio for the year was
6.3
 
7.5
 
10.0