jccounting Ratios 4.101 ig agent Ratio and Quick Ratio 4 i From the following, compute Current Ratio: E S : rade Receivables (Sundry Debtors) 180,000 | Bills Payable 20,000 prepaid Expenses: 40,000 | Sundry Creditors 100,000 jl Cash and Cash Equivalents 50,000 | Debentures 400,000 Marketable Securities 50,000 | Inventories 80,000 ( Land and Building 5,00,000 | Expenses Payable 80,000 [Ans.: Current Ratio = 2:1] {Hint: Marketable securities means the Short-term Investment] 2, Calculate Current Ratio from the following information: ae eae Particulars z 10,00,000 | Non-currentLiabiities 2,60,000 5,00,000 | Non-current Investments 3,00,000 640,000 [Ans.: Current Ratio = Current Assets & 10,00,000, Inventories & 5,00,000, Working Capital % 6,00,000. Calculate Current Ratio. J [Ans.: Current Ratio = 2.5: J [Hints: 1. Inventories are already included in Current Assets. : 2. Current Liabilities = Current Assets ~ Working Capital.] f. Trade Payables € 50,000, Working Capital % 9,00,000, Current Liabilities € 3,00,000. Calculaté Current Ratio. (Ans. Current Ratio = 4 : 1. lint: Trade Payables are already included in Current Liabilities] forking Capital X 6,00,000, Total Debt % 27,00,000, Non-current Liabilities T 24,00,000. Calculate Current Ratio, [Ans.: Current Ratio = 3 : 1,] Current Ratio is 2.5, Working Capital is % 1,50,000. Calculate the amount of Current Assets and rrent Liabilities. [Ans.: Current Assets = & 2,50,000; Current Liabilities = & 1,00,000 Working Capital is % 18,00,000; Trade Payables & 1,80,000; and Other Current Liabilities are & 4,20,000. Galeulate Current Ratio. (Ans: Current Ratio = 4 : 1 forking Capital & 9,00,000; Total Debts (Liabilities) % 19,50,000; Long-Term Debts % 15,00,000. Calculate Current Ratio. {Ans.: Current Ratio = 3 : 1.] {Hints: 1. Current Liabilities = Total Debts ~ Long-term Debts. 2. Current Assets = Working Capital + Current Liabilities] 9. Current Assets are & 7,50,000 and Working Capital is % 2,50,000. Calculate Current Ratio. [Ans.: Current Ratio = 1.5: 1] 10. A company had Current Assets of € 4,50,000 and Current Liabilities of & 2,00,000. Afterwards it purchased | 00ds for & 30,000 on credit. Calculate Current Ratio after the purchase. (Ans. Current Ratio = 2.09 : 1.)4.102 1. 12. 14, 1 16. . Ratio of Current Assets (€ 8,7: a Analysis of Financial Statements— cp, SE i i 2:1. It pai ny were & 1,75,000 and its Current Ratio was Paid % 39, fa. company [Ans.: Current Ratio om 2294 after payment. , of Current Ratio & 3,00,000) to Current Liabilities (€ 2,00,000) is 1.5 : 1. The accountany rent Ratio of 2: 1 by paying off a part of the Current {j OF te ities that should be paid so that the Current Ratio at the ties [ans.: Current Liabilities t0 the extent of & 1,00,000 should be <4 achieve the Current Ratio at the leyey one te ay Current Liabilities Creditor. Calculate Ratio of Current Assets D Fam is interested in maintaining @ Cur Compute amount of the Current Lial y be maintained. 2:1:ma} [Hint: Let the amount of Current Liabilities to be paid =x % 400,000 - 2x == 3,00,000 - x x = % 1,00,000.] 5,000) to Current Liabilities © 3,50 redit. Compute am‘ or 000) is 2.5 : 1. The firm wants to ma; ount of goods that should be mane ase Current Ratio of 2:1 by purchasing goods on ¢! [Ans.: Purchase goods of 1,754, 75000 ‘on credit. A firm had Current Asset became 2: 1. Determine Current Liabilities {ans.: Current Lial Working Capital b :s of & 5,00,000. It paid Current Liabilities of 1,00,000 and the Current Pat ‘and Working Capital before and after the payment was wae fe bilities before Payment & 3,00,000; after Payment 2,090, fore Payment & 2,00,000; after Payment X 2,0, 0 whether the Current Ratio will improve or decline or will have no effect in each of State, giving reason, ‘urrent Ratio is 2: 1: the following transactions if Ci (a) Cash paid to Trade Payables. (b) Bills Payable discharged. (©) Bills Receivable endorsed to a creditor. (d) Payment of final Dividend already declared. (e) Purchase of Stock-in-Trade on credit. (f) Bills Receivable endorsed to a Creditor dishonoured. (g) Purchase of Stock-in-Trade for cash. (h) 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; (o) Improve; (d) Improve; (e) Decline; (f) Decline; (g) No Effect; (h) Improve; (i) Improe r not change the state, giving reasons, which of the following transactions would improve, reduce 0} Current Ratio, if Current Ratio of a company is (i) 1: 1; or (ii) 0.8: 1: (a) Cash paid to Trade Payables. (b) Purchase of Stock-in-Trade on credit. (©) Purchase of Stock-in-Trade for cash. (d) Payment of Dividend payable. (e) Bills Payable discharged. (f) Bills Receivable endorsed to a Creditor. (g) Bills Receivable endorsed to a Creditor dishonored. [Ans.: (i) (a) No Change; (b) No Change; (c) No Change; (f) No Change; (g) No Change; (i) (a) Reduce; (b) Improve: (d) Reduce; (e) Reduce; (f) Reduce: (d) No Change; (e) No change (No change @ Improreccopinting Ratios 4.103 Lz. From the following information, calculate Liquid Ratio: Pc ie gs ee Particulars rate arent Assets 2,00,000 | Trade Receivables ROHe ("1 eon00 lventories | 50000 Current Liabilities | 70,000 Prepaid Expenses | 19,000 | (Ans.: Liquid Ratio = 2:1] ‘epaid Expenses % 20,000; Working Capital & 2,40,000. (Ans. Current Ratio = 25: 1. \ Quick Assets & 3,00,000; Inventory (Stock) % 80,000; Pr Calculate Current Ratio. [Hints: 1. Current Assets = Quick Assets + inventory + Prepaid Expenses. 2 Current Liabilities = Current Assets - Working Capital 19. Current Assets & 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, Ww 2. Current Liabilities = Current Assets ~ Working Capital] 20. Current Liabilities of a company are % 6,00,000. Its Current Ratio is 3: 1 and Liquid Ratio is 1:1. \p) Calculate value of Inventory. IAns.: Inventory = 12,00,000] ‘ Mr. Moon Ltd. has a Current Ratio of 3.5: 1 and Quick Ratio of 2 ; 1. If the Inventories is T 24,000; calculate total y Current Liabilities and Current Assets. [Ans.: Current Assets = % 56,000; Current Liabilities = & 16,000.) . 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] . 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 =X 10,00,000] 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. [Ans.: Current Assets = % 4,50,000; Liquid Assets = & 1,50,000; Inventory = & 3,00,000.) (olo Ltd’s Liquidity Ratio is 2.5 : 1. Inventory is € 6,00,000. Current Ratio is 4: 1. Find out the Current iabilities. (Ans.: Current Liabilities = 4,00,000 irrent Assets of a company are % 5,00,000. Its Current Ratio is 2.5 : 1 and Quick Ratio is 1: 1. Calculate alues of Current Liabilities, Liquid Assets and Inventory. [Ans.: Current Liabilities = € 2,00,000; Liquid Assets = ® 2,00,000; Inventory = & 3,00,000 ing Capital of a company is 3,60,000; Total Debts & 7,80,000; Long-term Debts % 6,00,000; Inventories 0,000. Calculate Liquid Ratio. [Ans.: Liquid Ratio = 2:1) tS: 1. Current Liabilities =Total Debts (Liabilities) - Long-term Debts %7,80,000 -% 6,00,000 = 1,80,000). Quick Ratio of a company is 2 : 1. State, giving reasons, which of the following transactions would () Improve, (ii) Reduce, (iii) Not change the Quick Ratio: f goods for cash; (b) Purchase of goods on credit; (c) Sale of goods (costing 20,000) for i) aes ‘of goods (costing % 20,000) for % 22,000; (e) Cash received from Trade Receivables, {Ans.: (a) Reduce; (b) Reduce; (c) Improve; (d) Improve; (e) No Change}4.104 s : oR [lowing transactions woulg i Sty Nh 29, Quick Ratio of Z Ltd. is 1 we iii ange the ratio. : : (ji) Decrease or (iii) Not ¢ ae ( Included in the trade payables was bill payable oft 3,000 whic met on Pat a i i eS. Debentures of € 50,000 were converted into equity shar : (b) Debet [Ans.: (a) No ae change (by i tig Mer .. 0.8; 1. Stater with reason, whether the following tare 7m ction, ‘ 30. The Quick Ratio of a company !S : increase, decrease of not change the Quick Ratio eine ‘ ur emium pal nce % 500; (i if loose tools for ¥ 2,000; (ji) Insurance pre f i Sa Deon a bills payable of € 5,000 on maturity. eof, d pay ea H on credit © 3,000; (iv) Honoure : {Ans.: (i) Decrease; (ii) Decrease; (iii) Increase: a " Dette, ‘e] gets are & 12,00,000 and Quick Ratio is 21, y, [Ans.: Current Ratio e . 0 =25. 4. Venus Lta’s Inventory s £3,00,000. Total Liquid As Current Ratio. i patio) = Liquid Assets (& 12,00,000) [Hints: 1- 2/1 (Quick Ratio) = Current Lia %12,00,000/2 = % 6,00,000. =%15,00,000.] Capital Employed = 10,00,000. There were {Ans.: Current Ratio ah Current Liabilities = 2. Current Assets = Liquid Assets + Inventory 32. Total Assets © 11,00,000; Fixed Assets € 5,00,000; Long-term Investments. Calculate Current Ratio. (Hints: 1. Current Assets = Total Assets — Fixed Assets. 2, Current Liabilities = Total Assets - Capital Employed.) 33, Capital Employed % 20,00,000; Fixed Assets % 14,00,000; Current Liabilities € 2,00,000. There are tments. Calculate Current Ratio. [Ans.: Current Ratio = 4 i Long-term Inves {Hint: Current Assets = Capital Employed + Current Liabilities - Fixed Assets.] 34, From the following calculate: (i) Current Ratio; and (ii) Quick Ratio: z Total Debt 12,00,000 | Long-term Borrowings i Total Assets 16,900,000 | Long-term Provisions ae Fixed Assets (Tangible) 6,00,000 | Inventories al Non-current Investments 1,00,000 Prepaid Expenses ‘W i Long-term Loans and Advances 1,00,000 a a [ans.: Current Ratio = 2:1; Quick Ratio =15 t 35. Following is the Balance Sheet of Crescent Chemical Works Limited as at 31st March, 2021: Particulars Pe cui ANDLABLES 2) S ees ae i 1. Shareholders’ Funds (a). Share Capital (b) Reserves and Surplus st 2. Non-Current Liabilities o Long-term Borrowings 3. Current Liabilities a (a). Short-term Borrowings (b) Trade Payables (Creditors) a (Q) Short-term Provisions: Provision for Tax ‘a | 150008 Total4.105 accounting Ratios i), ASSETS | | 4. Non-Current Assets | {@) Property Plant and Equipment (Fixed Assets)—Tangible | 45,000 (b)_Non-current Investments | 5,000 2. Current Assets | | (a) Inventories (Stock) 50,000 (b) Trade Receivables (Debtors) | 30,000 (@) Cash and Cash Equivalents | 20,000 | tes Total ‘Compute Current Ratio and Liquid Ratio. [Ans.: Current Ratio = 5: 17 Liquid Ratio = 2.5: 1.] Devt to Equity Ratio otal 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 [Hints: 1. Long-term Debts =Total Debts ~ Current Liabilities. 2. Shareholders’ Funds = Total Assets - Total Debts.] y 37. 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 (ie, % 1,30,00 6,40,000).] NS From the following information, calculate Debt to Equity Ratio: z 10,000 Equity Shares of = 10 each fully paid 1,00,000 5,000; 9% Preference Shares of € 10 each fully paid 50,000 General Reserve 45,000 Surplus, i.e., Balance in Statement of Profit and Loss 20,000 10% Debentures 75,000 50,000 Current Liabilities {Ans.: Debt to Equity Ratio = 0.35: 1.) Shareholders’ Funds & 2,00,000. Calculate Debt to Equity Ratio. | 39. Capital Employed & 8,00,000; e [Ans.: Debt to Equity Ratio = 3: 1.) 40, Balance Sheet had the following amounts as at 31st March, 2021: z z 10% Preference Share Capital 500,000 | « Current Assets 12,00,000 Equity Share Capital 15,00,000 | Current Liabilities 8,00,000 Securities Premium Reserve ,00,000 | Investments (in other companies) 2,00,000 Reserves and Surplus 4,00,000 | Fixed Assets—Cost 60,00,000 30,00,000 | Depreciation Written off 14,00,000 Long-term Loan from IDB! @ 99% Calculate ratios indicating the Long-term and the Short-term financial position of the company. [Ans.: Debt to Equity Ratio = 1.25 1; Current Ratio = 1.5: 11 1. Calculate Debt to Equity Ratio from the following information: z z "Fixed Assets (Gross) 8,40,000 | Current Assets 3,50,000 ‘Accumulated Depreciation 1,40,000 | Current Liabilities 2,80,000 lon-current Investments 14,000 | 10% Long-term Borrowings 4,20,000 c 56,000 | Long-term Provisions 1,40,000 term Loans and Advances [Ans.: Debt to Equity Ratio = 2; 1.)Analysis of Financial Statement, 4.106 a ; her this ratio will increase, Ey 42. When Debt to Equity Ratio is 2, state, giving reason, whether , : x Vg no change in each of the following cases: : ; ; (i Shi (i) Sale of Land (Book value & 4,00,000) for on (ii) Semin oe it 10,000; (ii) Issue of Preference : % Delt Panta Hac ae worth & 10,0 tans. () Decrease; (i) Decrease; i 5 a wort! ,00,000. : - 43. Debt to Equity Ratio of a company is 0.5 : 1. Which of the following suggestions would increase eee : at decrease or yy i is, or not change it: (i) Issue of Equity Shares; Ie (iii), Redemption of debentures; (iv) Purchased goods on ec tans.: i) Decrease; (i) No change; i) No change; iv) Ne (ii) Cash received from debtors; i rg 44, Assuming that the Debt to Equity Ratio is 2: 1, state, giving reasons, which of the following transa would (i) Increase; (ii) Decrease; (iii) Not alter Debt to Equity Ratio: tong (i) Issue of new shares for cash. (ii) Conversion of debentures into equity shares. (iii) Sale of a fixed asset at profit. (iv) Purchase of a fixed asset on long-term deferred payment basis. (W) Payment to creditors. (CBSE Ciculr Aca (Ans: () Decrease; (i) Decrease; ii) Decrease; (Increase; () No Changs 45. From the following Balance Sheet of ABC Ltd. as at 31st March, 2021, calculate Debt to Equity Ratio Particulars 1. EQUITY AND LIABILITIES 1. Shareholders’ Funds (a) Share Capital: (i) Equity Share Capital | 5,00,000 (li) 10% Preference Share Capital | | 5:90,000 1900000 (b) Reserves and Surplus —— 2,40,000 2. Non-Current Liabilities | Long-term Borrowings (Debentures) | 250000 3. Current Liabilities (@) Trade Payables 430000 (b) Other Current Liabilities | 20000 ()_ Short-term Provisions: Provision for Tax 3,00,000 Total 220000 Il, ASSETS | fee 1. Non-Current Assets Property, Plant and Equipment (Fixed Assets): | (i) Tangible Assets | 640,000 (ii) Intangible Assets | 100,000 2. Current Assets | (@) Inventories | 730000 (b) Trade Receivables 6 40000 (0) Cash and Cash Equivalents 1,100 Total [Ans.: Debt to Equity Ratio = 4?geo Ratios il assets to Debt Ratio 4.107 i of calculate Total Assets to Debt Ratio from the following information: Long-term Debts % 4,00,000; Total Assets & 7,70,000, ae f shareholders” Funds % 1,60,000; Total Debts % 360,000; Curr calculate Total Assets to Debt Ratio. [Ans.: Total Asset = ; pins 1 Longer Debts =Total Debs Cen in \ssets to Debt Ratio = 1.625: 1.] 2. Total Assets = Long-term Debts + Shareholders’ Re total Debt € 60,00,000; Shareholders’ Funds & 10,0 (Ans.: Total Assets to Debt Ratio = 1.925: 1) ent Liabilities € 40,000. ds + Current Liabilities.) 10,000; Reserves and Surplus % 2,50,000; Current Assets ‘e Total Assets to Debt Ratio. E f Ms 25,00,000; Working Capital € 5,00,000, Calcutat F ; Ans.: Total Assets to Debt Ratio = 1.75: 1. (Hint: Reserves and Surplus are already included in Shareholders’ Funds.) 7 4g, Total Debt %15,00,000; Current Liabilities & 5,00,000; Capital Employed % 15,00,000. Calculate Total Assets bt Ratio. A to Del i [Ans.: Total Assets to Debt Ratio = 2: 1.] \Sp, calculate Total Assets to Debt Ratio from the following information: particulars 5 [geek Particulars z Foal Assets 15,00,000 | Bills Payable 60,000 tal Debts 12,00,000 | Bank Overdraft 50,000 cers 90,000 | Outstanding Expenses 20,000 : \ [Ans.: Total Assets to Debt Ratio = 1.53: 11 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 to Debt Ratio = 1.75: 1.] {Hint: Reserves and Surplus are already included in Shareholders’ Funds.} \\\52. Calculate ‘Total Assets to Debt Ratio’ from the following information: AS Equity Share Capital 4,00,000 Long-term Borrowings 1,80,000 "Surplus, ie, Balance in Statement of Profit and Loss 1,00,000 General Reserve 70,000 _ Current Liabilities 30,000 _ Long-term Provisions 1,20,000 (CBSE 2019) [Ans.: Total Assets to Debt Ratio = 3: 1.) [Hints: 1, Total Assets = Total Liabilities = Equity Share Capital + Long-term Borrowings + Surplus, i. e Balance in Statement of Profit and Loss + General Reserve + Current Liabilities + Long-term Provisions = % 9,00,000. 2. Debt = Long-term Borrowings + Long-term Provisions = calculate Total Assets to Debt Ratio: % 3,00,000.) From the following information, z z xed Assets (Gross) 6,00,000 | Accumulated Depreciation 100,000 urrent Investments 10,000 | Long-term Loans and Advances 40,000 urrent Assets 250,000 | Current Liabilities 2,00,000 i 3,00,000 | Long-term Provisions 100,000 [Ans.: Total Assets to Debt Ratio = 2: 1Analysis of Financial Statements__cp, SE 4.108 Proprietary Ratio jetary Ratio: ° the following information. calculate Propriia'y nd Surplus 54, From ° z500,000 | Reserves Share Capital 413,20.000 | Current Assets [Ans.: Proprietary Ratio = Non-current Assets 55. From the following information, calculate Proprietary Ratio: Equity Share Capital Preference Share Capital Reserves and Surplus Debentures Trade Payables Fixed Assets Short-term Investments Other Current Assets (Ans.: Proprietary Ratio = 0.70: 1 er 79 56. Calculate Proprietary Ratio from the following: Equity Share Capital 450,000 | 9% Debentures 2300000 110% Preference Share Capital %3,20,000 | Fixed Assets 2700009 Reserves and Surplus %65,000 | Trade Investment 22450) Creditors %1,10,000 | Current Assets 230000 [Ans.: Proprietary Ratio = 0.67 : 1 or 67%] 57. State, with reason, whether the Proprietary Ratio will improve, following transactions if Proprietary Ratio is 0.8 : 1: (i) Obtained a loan of € 5,00,000 from State Bank of India payable after five years. (ii) Purchased machinery of % 2,00,000 by cheque. (ii) Redeemed 7% Redeemable Preference Shares ® 3,00,000. {iv) Issued equity shares to the vendor of building purchased for & 7,00,000. (v) Redeemed 10% redeemable debentures of & 6,00,000. decline or will not change because of the [Ans.: (i) Decline; (ii) No change; (iii) Decline; (iv) Improve (v) Improve] 58. Calculate Proprietary Ratio, if Total Assets to Debt Ratio is - Debt is € 5,00,000. Equity Shares Capita! is 0.5 times of debt. Preference Shares Capital is 25% of equity share capital. Net profit before tax’ % 10,00,000 and rate of tax is 40%. (CBSE Sample Poper 2020 [Ans.: Proprietary Ratio = 1.912 : 1 or 91.2%) Calculation of Debt to Equity Ratio, Proprietary Ratio, and Total Assets to Debt Ratio 59. From the following information, calculate: (a) Proprietary Ratio; (b) Debt to Equity Ratio; and () Total Assets to Debt Ratio. Current Asset onetl ve %40,00.000 | Current Liabilities a gs %15,00,000 | Long-term Provisions 42500 Non-current Assets. % 40,00,000 fAns.: (a) P : : nes ae oar 25%; (b) Debt to Equity Ratio = 2 : 1; (c) Total Assets to Debt Ratio =? 2 = % 40,00,000; Total Assets = & 80,00,000; Proprietors’ Funds/Equity = & 20,00,000J 000 000 Hlaccounting Ratios , 4.109 60. From the following information, calculate: (a) Proprietary Ratio; ‘ (b) Debt to Equity Ratio; and (c) Total Assets to Debt Ratio. Total Debt ert %18,00,000 | Current Assets %7,50,000 a q a YE : %15,00,000 | Working Capital %1,50,000 5.2 ; yprietary pale = 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 ae If Net Profit before Interest and Tax is & 5,00,000 and interest on Long-term Funds is & 1,00,000, find Interest Coverage Ratio. a ee Coverage Ratio [Ans.: Interest Coverage Ratio = 5 Times.) 8b. From the following information, calculate Interest Coverage Ratio: Net Profit after Tax % 1,70,000; Tax & 30,000; Interest on Long-term Funds & 50,000. [Ans.: Interest Coverage Ratio = 5 Times.) 3. From the following details, calculate Interest Coverage Ratio: Net Profit after Tax & 7,00,000 69% Debentures 20,00,000 Tax Rate 30% x [Hint: Find Profit before Interest and Tax by adding Profit after Tax, Tax and Interest] (CBSE Sample Paper 2019) ¥ [Ans.: Interest Coverage Ratio = 9.33 Times] » From the following information, calculate interest Coverage Ratio: Net profit after interest and tax € 1,20,000; Rate of income tax; 40%; 15% Debentures ® 1,00,000; 12% Mortgage loan & 1,00,000. (CBSE 2019) [ans.: Interest Coverage Ratio = 8.41 Times] 65. From the following information, calculate Interest Coverage Ratio: z 40,000 Equity Shares of € 10 each 1,00,000 £89 Preference Shares 70,000 10% Debentures 50,000 Long-term Loans from Bank 50,000 Interest on Long-term Loans from Bank 5,000 Net Profit after Tex 75,000 Tax 9,000 [Ans.: Interest Coverage Ratio = 9.4 Times.) [Hint: Profit before Interest and Tax is % 94,000 (i.e. = 75,000 + % 9,000 + 5,000 +% 5,000). a Pipventory Turnover Ratio 66. From the following details, calculate Inventory Turnover Ratio: z “Cost of Revenue from Operations (Cost of Goods Sold) som Inventory in the beginning of the year Taapee Inventory at the close of the Year oe {Ans.: Inventory Turnover Ratio = 3 Times.)Analysis of Financial Statementscy, E 4.110 xy ¢ Inventory Turnover Ratio: i ion, calcula 67. From the following information San cian ented v1 92,000 | Wages 4 oy %4,000 | Freight Outwards ig Us (Ans. Inventory Turnover Ratio ~ 5 Opening Inventory Purchases Carriage Inwards ine) i Sold) % 5,00,000; Purchases & 5,50,995, 68. Cost of Revenue from Operations (Cost of Goods . che panties i tans. Inventory Turnover Ratio ~ «5 Calculate Inventory Turnover Ratio. a [Hint: Closing Inventory = Opening Inventory + Purchases - Cost of Revenue from Operations toe int: Goods Sold).) tio from the following information: 69. Calculate Inventory Turnover Rat Opening Inventory is T 50,000; Purchases % 3,90,000; Revenue from Operations, ie, je, aa % 6,00,000; Gross Profit Ratio 30%. [Ans.: Inventory Turnover Ratio = 17 Tine 70. Calculate Inventory Turnover Ratio from the following: e Opening Inventory 5800) Closing Inventory 6209) Revenue from Operations, 6 40009 Gross Profit Ratio 25%. (Ans. Inventory Turnover Ratio = § Tiny 71. From the following information, calculate Inventory Turnover Ratio: z Revenue from Operations 160000 Average Inventory 2.20000 Gross Loss Ratio 5%. (Ochi 0g tans. Inventory Turnover Ratio = 7.64 Times Mint: Cost of Revenue from Operations = Revenue from Operations + Gross Loss = 16,00,000 + % 80,000 (ie, 5% of € 16,00,000) = @ 168000) 72. Revenue from Operations & 4,00,000; Gross Profit € 1,00,000; Closing Inventory & 1,2 ,000; Excess of Closing Inventory over Opening Inventory € 40,000. Calculate Inventory Turnover Ratio. (Ans. Inventory Turnover Ratio = 3 Times} 73. From the following data, calculate Inventory Turnover Ratio: Total Sales € 5,00,000; Sales Return & 50,000; Gross Profit 90,000; Closing Inventory & 1,00,000; Excess of Closing Inventory over Opening Inventory % 20,000, [Ans.: Inventory Turnover Ratio = 4 Times} 74. & 2,00, Goods Sold), during the year. if Inventory he year. inventories at the end is 1.5 times [Ans.: Inventory at the end = % 30,000] 75. From the following inform Inventory Turnover Ratio for the years 2015-16 and 2016-17; Particule iculars ee. 2015-16 (%) 2016-178) Inventory on 31st March Peer eh a i },000 Revenue from Operations | ee i 000 (Gross Profit is 259% on Cost of Revenue from Operations) = a. n the year 2015~ 16, inventory increased by ® 2,00,000, (Delhi and 12018 (Ans.: Inventory Turnover Ratio: 2015-16 = 6.67 Times; 2016-17 = 5 Times]eos Bato 4.111 ajetate Inventory Aas Ratio from the following information: 6 i tory % 40,000; Pt : 1 pening Inventory 'urchases & 3,20,000; and Closing Inventory & 1,20,000. i ason, which of the followi te, giving fe lowing transactio i i ili) neit swe g rin ecrease the Inventory Turnover Ratio Ns would (i) increase, (ii) decrease, (iii) neither fa) sale of goods for & 40,000 (Cost & 32,000), fp) Increase in the value of Closing Inventory by % 40,000, {@) Goods purchased for & 80,000. (d) Purchases Return & 20,000. (@) Goods costing € 10,000 withdrawn for personal use. (f) Goods costing % 20,000 distributed as free samples. (Ans.: Inventory Turnover Ratio = 3 Times. (a) Increase; (b) Decrease; (c) Decrease; (d) Increase; (e) Increase; (f) Increase.) following figures have been extracted from Shivalika Mills Ltd. Inventory in the beginning of the year & 60,000. Inventory at the end of the year % 1,00,000. inventory Turnover Ratio 8 times. Selling price 25% above cost. Compute amount of Gross Profit and Revenue from Operations (Net Sales). [Ans.: Gross Profit = & 1,60,000; Revenue from Operations, ie, Net Sales = 8,00,000.] 78. From the following Information, calculate Inventory Turnover Ratio: Credit Revenue from Operations F 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.] 79. Calculate Inventory Turnover Ratio in each of the following alternative cases: Case 1; Cash Sales 25% of Credit Sales; Credit Sales % 3,00,000; Gross Profit 20% on Revenue from Operations, ie., Net Sales; Closing Inventory € 1,60,000; Opening Inventory & 40,000. Case 2: Cash Sales 20% of Total Sales; Credit Sales € 4,50,000; Gross Profit 25% on Cost: Opening Inventory % 37,500; Closing Inventory & 1,12,500. _(Ans.t Case (1) 3 Times; Case (2) 6 Times.) [Hint: Profit 259 of Cost = Profit 20% on Sales. Profit on Cost = 25/100 or 1/4 or 25%. Let the Cost = £100; Profit = €25; Revenue from Operations, ie, Net Sales = €125. Profit on Sales = % 25/% 125 = 1/5 or 20%] the following Statement of Profit and Loss for the year ended 31st March, 2021 of Rex Ltd., calculate 80. From Inventory Turnover Ratio: STATEMENT OF PROFIT AND LOSS forthe year ended 31st March, 2021 Particulars Note No. z 1. Revenue from Operations (Net Sales) | 6,00,000 I Expenses: | (2) Purchases of Stock-in-Trade 3,00,000 {b) Change in Inventory of Stock-in-Trade 1 50,000 (0) Employees Benefit Expenses 60,000 2 45,000 (d) Other Expenses Total Expenses |. Proft before Tax '~I) 1,45,000 J. Less: Tax ig 45,000 1,00,000 J. Profit after Tax (il 1V) |Analysis of Financial Statemeng, A 4.112 : SI Ey Notes to Accounts Particulars aes ae eke ee : 1. Change in Inventory of stock-in-Trade Opening Inventory e Less: Closing Inventory | 1254 L254 SO, 2. Other Expenses " Carriage Inwards : Miscellaneous Expenses ; ig 009 45 [Ans.: Inventory Turnover Rai TSS Tin (Cost of Goods Sold) = Purchases of Stock-in-Trade +h ange [Hint: Cost of Revenue from Operations arriage Inwards = % 3,65,000.] in Inventory of Stock-in-Trade + G Calculation of Opening and Closing Inventory 81, From the following information, calculate value of Opening Inventory: Closing Inventory & 68,000 Total Sales & 480,000 (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. 82. 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 mo 4000 than the Opening Inventory. (Ansc: Opening Inventory = X 28,000; losing Inventory = & a 83, Inventory Turnover Ratio 5 times; Cost of Revenue from Operations (Cost of Goods Sold) & 18,90,0q9 Calculate Opening Inventory and Closing Inventory if Inventory at the end is 2.5 times more thant in the beginning. [Ans.: Opening Inventory = 1,68,000; Closing Inventory =% 5, 8m (Ans.: Opening Inventory =& 5p gy 2,00 84. % 3,00,000 is the Cost of Revenue from Operations (Cost of Goods Sold). Inventory Turnover Ratio 8 ti Inventory in the beginning is 2 times more than the Inventory at the end. Calculate value of 0, : and Closing Inventories. (0. 4 ae lh 2004 [Ans.: Opening Inventory = & 56,250; Closing Inventory = 18,750} Trade Receivables Turnover Ratio 85. Credit Revenue from Operations, ie, Net Credit Sales for th ie, year Debtors Sa Bills Receivable ra : 80,000 Calculate Trade Receivables Turnover Ratio. [Ans.: Trade Receivables Turnover Ratio = 6 Ties] 86. Calculate Trade Receivables Turnover Ratio from the following information: ne Opening Balances (?) Closing Balances Bills Receivable ae a Provision for Doubtful Debts ae a 500 4,500 Total Sales & 1,00,000; Sales Return & 1,500; Cash Sales & 23,500. (Ans. Trade Receivables Turnover Ratio =2 Ti [Hint: Provision for Doubtful Debts i: ts is not deducted from Tr e to calculate Trade Receivables Turnover Ratio] eee iejccounting Ratios 413 47. closing Trade Receivables 8 90,000, Revenue from Operations 87,2000, Cash Revenue from Operations % 1,80,000. Provision for Doubtful Debts & 8,000. Calculate Trade Receival ° bles Turnover Ratio. (Ans.: Trade Receivables Turnover Ratio = 6 Times) 48, Closing Trade Receivables 2 1,00,000; Cash Sales being 25% of Credit Sales; Receivables over Opening Trade Receivables & 40,000; Calculate Trade Receivables Turnover Ratio, Excess of Closing Trade Revenue from Operations, ie., Net Sales % 6,00,000. (Ans.: Trade Receivables Turnover Ratio = 6 Times.) 49, From the following particulars, determine Trade Receivables Turnover Ratio, z Revenue from Operations (Net Sales) 20,00,000 Credit Revenue from Operations (Credit Sales) 16,00,000 Trade Receivables 2,00,000 [Ans.: Trade Receivables Turnover Ratio = 8 Times.] 90. Compute Trade Receivables Turnover Ratio from the following: 31st March, 2020 (%) 31st March, 2021 (2) Revenue from Operations (Net Sales) 8,00,000 7,00,000 Debtors in the beginning of year 83,000 4,17,000 Debtors at the end of year 117,000 83,000 Sales Return 1,00,000 50,000 [Ans.: 31st March, 2020 = 8 Times; 31st March, 2021 = 7 Times.] 91. Closing Trade Receivables % 1,20,000, Revenue from Operations & 14,40,000. Provision for Doubtful Debts % 20,000. Calculate Trade Receivables Turnover Ratio. [Ans.: Trade Receivables Turnover Ratio = 12 Times.) 92, Closing Trade Receivables % 4,00,000; Cash Sales being 25% of Credit Sales; Excess of Closing Trade Receivables over Opening Trade Receivables € 2,00,000; Revenue from Operations, ie, Net Sales € 15,00,000. Calculate Trade Receivables Turnover Rat Ans.: Trade Receivables Turnover Ratio = 4 Times.) [Hints: 1, Net Credit Sales = Total Sales - Cash Sales = 15,00,000 ~ 20% of & 15,00,000 = 8 12,00,000, 2. Opening Trade Receivables = Closing Trade Receivables - Excess of Closing Trade Receivables over Opening Trade Receivables.} A firm normally has Trade Receivables equal to two months’ Credit Sales. During the coming year it expects Credit Sales of & 7,20,000 spread evenly over the year (12 months), What is the estimated amount _ of Trade Receivables at the end of the year? [Ans.: Estimated Trade Receivables = 1,20,000] . Mercury Ltd, made Credit Sales of € 4,00,000 during the financial period. Ifthe collection period is 36 days and year is assumed to be 360 days, calculate: (i) Trade Receivables Turnover Ratio; (ii) Average Trade Receivables; "(ii Trade Receivables at the end when Trade Receivables at the end are more than that in the beginning by %6,000. [ans.: () Trade Receivables Turnover Ratio = 10 Times; (i) Average Trade Receivables = % 40,000; (ii) Trade Receivables in the beginning = & 37,000; Trade Receivables at the end = % 43,000)Analysis O° 7. 7. ¢ Ca 4 on Ratio in each of the following alternative cases; de Receivables Turnover Sera resales € 100000. = 4,00,000; Avé tes) 2 30,00,000; Cash Revenue from Operation : ns (Net os ceivables © 2,00,000; Closing Trade Receivables ig, Trade Re Cost of Goods Sold & 3,00,000; Gross Prof oh 540 rade Receivables € 50,000; Closing Trade ae % - iy . Calculate Tra a Case 1: Net Credit Sales case 2: Revenue from Operatiot sales % 6,00,000; Opening Operations or ¢ ales; Opening * Cost of Revenue from Cash Sales 20% of Total S = 1,00,000. Cost of Revenue from 20%; Cash Sales 25% of 000. ' Receivables & 60 = 4 Times; Case 2; Trade Receivables Turnover Rat Rati Trade Receivables Turnover Na" 2 Psi iach a - ide Receivables Turnover Ratio = 4 Times; Case 4: ; ove Ratio = : a calculate Trade Receivables Turnover Ratio: 7 Credit Sales ® 8,00,000; Opening Trade Receivables & 1.2994, 00, ng Case 3: perations or cost of Goods Sold € 450.000 Gross oy p Opening Trade Receivables & 90,00; cg, og. cae f Net Credit Sales, fans: Case I: Case 3: Tra rm the information given below, e, 96. Fro Credit Revenue from Operations, i Closing Trade Receivables = 2,00,000. state, giving reason, which of the following would increase, Turnover Ratio: (i) Collection from Trade Receivables % 40,000. erations, ie, Credit Sales € 80,000. decrease or not change Trade Recs ib, (ii) Credit Revenue from Ops (iii) Sales Return % 20,000. (iv) Credit Purchase & 1,60,000. tans. Trade Receivables Turnover Ratio = 5 Times; (i) Increase; (i) Decrease; (i) Increase; i) No Chan Calculation of Opening and Closing Trade Receivables 97. 2 1,75,000is the Credit Revenue from Operations, ie., Net Credit Sales of an enterprise. If Trade Receivay Turnover Ratio is 8 times, calculate Trade Receivables in the beginning and at the end of the year F Z Receivables at the end is % 7,000 more than that in the beginning. 4 (Ans. Trade Receivables in the beginning = ® 18,375; Trade Receivables at the end =% 2575 98. From the following information, calculate Opening and Closing Tradi i i 3 ome falling om ig Trade Receivables, if Trade Receivabis {)) Cash Revenue from Operations is 1/3rd of Credit Revenue from Operations. (i) Cost of Revenue from Operations is & 3,00,000. | il) Gross Profit is 25% of the Revenue from Operations. (iv) Trade Receivables at th ; end are 3 Times more than that of in the beginning, (Ans.: . (Ans: Opening Trade Receivables = 8 40,000; Closing Trade Receivables =& 160 99. Cash Revent i aoe sae ee jobeations As Sales) € 2,00,000, Cost of Revenue from Operations or Cost of s 50,000; Gross Profit € 1,50,000; Trade R ; Snipe Closing Trade Receivables in each of the ‘loving over Ratio 3\Tines ae If Closing Tradk i native cases: Cane aan Tad Receivables were & 1,00,000 in excess of Openi , cana Made Recelvables atthe end were 3 times than ica ase 3: I Trade Receivables at the end were 3 time rere s mor [Ans.: re thi sant, Opening Trade ccehaics ‘an that of in the beginning. ae (: 50,000 Closing Trade Receivables @) ae 50,000 1,50,000 ‘ase 3: "50,000 1,50,000 1,60,000.]