Ratios practice set 2

1. The following Trading and Profit and Loss Account of Fantasy Ltd. for the year 31‐3‐2000 is given
below:

Calculate:

1. Gross Profit Ratio

2. Expenses Ratio

3. Operating Ratio

4. Net Profit Ratio           

5. Operating (Net) Profit Ratio   

6. Stock Turnover Ratio

2. The Balance Sheet of Punjab Auto Limited as on 31‐12‐2002 was as follows:

From the above, compute (a) the Current Ratio, (b) Quick Ratio, (c) Debt‐Equity Ratio, and (d)
Proprietary Ratio.
3. The Capital of a Company is as follows:

Market price of equity share $40

You are required to state the following showing necessary workings:

1. Dividend yield on equity shares

2. Cover for preference and equity dividend

3. Earning for equity share

4. Price-earnings ratio

1-cash dividend / mArKET price *100 = 53.33/ 40 *100 = 133.33

2- 270000/ 27000 = 10 270000 – 27000/ 160000= 1.52

3- 270000-27000/ 80000 = 3.038

4- shae pice / eps = 40/ 3.038 = 13.16

4. Prakash has a term loan of $10,00,000 and interest on loan for the year is $125,000 and profit
before interest and tax is $500,000. Calculate interest coverage ratio.

500000/ 125000 = 4:1

5. From the following information, calculate inventory turnover ratio : Accounting Ratios

Inventory in the beginning = 18,000 Inventory at the end = 22,000 Net purchases = 46,000 Wages =
14,000 Revenue from operations = 80,000 Carriage inwards = 4,000

60000/ 20000 = 3 times

6. Calculate the Trade receivables turnover ratio from the following information: Total Revenue from
operations 4,00,000 Cash Revenue from operations 20% of Total Revenue from operations Trade
receivables as at 1.4.2014 40,000 Trade receivables as at 31.3.2015 1,20,000.

320000/ 80000 = 4 times

Calculate the Trade payables turnover ratio from the following figures: Credit purchases during
2014-15 = 12,00,000 Creditors on 1.4.2014 = 3,00,000 Bills Payables on 1.4.2014 = 1,00,000 Creditors
on 31.3.2015 = 1,30,000 Bills Payables on 31.3.2015 = 70,000.

1200000/ 300000 = 4 times

7. From the following information calculate (i) Earning per share (ii) Book value per share (iii)
Dividend payout ratio (iv) Price earning ratio

70,000 equity shares of Rs 10 each 7,00,000

Net Profit after tax but before dividend 1,75,000

Market price of a share 13

Dividend declared @ 15%

1- 175000/ 70000 = 2.5

2- 875000/ 70000 = 12.5
3- 105000 / 175000 = 0.6
4- 13/ 2.5 = 5.2

7. The following is the summarised Profit and Loss Account of Taj Products Ltd. for the year ended
31st December
Sales 850000

Op stock + pur+ wages+ manf. Exp – closing stock= 570000

Fg goods 60000

Cogs 510000

Gp – 340000

S&d (30000)

Adm (150000)

Net op profit 160000 (ebit)

Non – op income 3000

Sale of shares 6000

169000

Exp (4000 +15000)

ebt 150000

Calculate following ratios

1. Gross Profit ratio – 340000/ 850000 * 100 = 40%

2. Net Profit ratio = 150000 / 850000 = 17.64%

3. Operating ratio= 150000 + 30000+ cogs/ 850000 = 0.81

4. Cost ratios

i. material consumed - 99500 + 320000 – 89000 (330500)/570000 = 0.579

ii. Labour cost ratio- 225250 / 570000= 26.5%

iii. Production overhead cost ratio –14250/ 570000 = 0.025

8. From the following Balance Sheet and additional information, you are required to
calculate:

i. Return on total resources = np / TA = 280000/ 1360000= 0.205

ii. Return on capital employed = ebit / cap employed (TA – CL)= 296000 / 1200000= 0.25

iii. Return on shareholder’s fund = 140000 (280000 - (50%)) / 10,00,000 = 0.14

Net operating profit before tax is $280,000. Assuming tax rate is 50% and dividend declared amount
is $120,000

9. With the following ratios and further information given below, prepare a Trading,
Profit and Loss Account and Balance Sheet:
Gross Profit ratio = 25%
Net profit ratio = 20%
Stock turnover ratio = 10
Net profit/Capital = 1/5
Capital to total liabilities = ½
Fixed assets/capital =5/4
Fixed assets/Total current assets = 5/7
Fixed assets =$10,00,000
Closing stock = $1,00,000

ca- 1400000

capital – 800000

np – 160000

np ratio – 20%

np / sales = 20 %

160000 / sales = 20 / 100

Sales = 800000

Gp ratio = gp / sales

25/100 = gp /800000

Gp = 200000
Cap / liab = ½

800000/ liab = 1/ 2

Liab = 1600000

Stock inventory = 10
Cogs (sales – gp)/ avg inventory = 10

600000/ invent = 10

Inv = 60000

Op stock = 60000*2 = 120000 -100000 = 20000

Op stock 20000 sales 800000

Purchase 680000 clos stock 100000

Gp 200000

900000 900000

Np 160000 Gp /bd 200000

Exp 40000

200000 200000

B/S
liab assest

total liab 1600000 stock 100000

np 160000 fa 10,00,000

capital 640000 ca 1300000

(800000 – 160000(np))

2400000 2400000