Ratio Analysis 1

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Ratio Analysis
Q.1 Calculate Current Ratio in each of the following alternative cases :
(a) Current Assets Rs. 2,00,000, Current Liabilities Rs. 1,00,000
(b) Current Assets Rs. 2,00,000, Working Capital Rs. 1,00,000
(c) Current Liabilities Rs. 2,00,000, Working Capital Rs. 1,00,000
(d) Inventory Rs. 2,00,000, Current Assets Rs. 4,00,000, Working Capital Rs. 2,40,000
(e) Trade Receivables Rs. 2,00,000, Other Current Assets Rs. 4,00,000, Working Capital Rs. 4,00,000
[Ans. (a) 2:1 (b) 2:1 (c) 1.5:1 (d) 2.5:1 (e) 3:1
Q.2 Calculate Quick Ratio in each of the following alternative cases :
(a) Quick Assets Rs. 2,00,000, Current Liabilities Rs. 1,00,000
(b) Inventory Rs. 2,00,000, Current Assets Rs. 2,00,000, Working Capital Rs. 2,40,000
(c) Inventory Rs. 2,00,000, Other Current Assets Rs. 4,00,000, Working Capital Rs. 4,00,000
(d) Trade Payable Rs. 2,00,000, Current Liabilities Rs. 4,00,000, Working Capital Rs. 2,40,000, Inventory
Rs. 1,40,000
[Ans. (a) 2:1 (b) 1.25:1 (c) 2:1 (d) 1.25:1
Q.3 From the following, calculate the current ratio and quick ratio :
Trade Receivables Rs. 8,00,000, Prepaid Expenses Rs. 80,000, Cash Rs. 2,40,000, Marketable Securities Rs. 1,60,0000, Machinery
Rs. 24,000,Land Rs. 16,000, Bills Payable Rs. 1,60,000, Trade Payables Rs. 4,80,000, Debentures Rs. 16,00,000, Inventory Rs.
3,20,000, Expenses Payable Rs. 3,20,000, Livestock Rs. 2,000
[Ans. Current Ratio 2:1 , Quick Ratio 1.5:1]
Q.5 Calculate Current Assets in each of the following alternative cases :
(a) Land & Building Rs. 2,00,000, Trade Receivables Rs. 1,60,000, Plant & Machinery Rs. 1,60,000, Inventory Rs. 1,20,000,
Furniture & Fixtures Rs. 1,40,000, Prepaid expenses RS. 20,000, Motor Vehicles Rs. 80,000, Long term Investment Rs. 2,00,000,
Marketable Securities Rs. 1,00,000, Preliminary expenses Rs. 40,000
(b) Current Liabilities Rs. 2,00,000, Working Capital Rs. 1,00,000
(c) Current Liabilities Rs. 2,00,000, Current Ratio 2.5.
(d) Inventory Rs. 20,000, Current Liabilities Rs. 40,000, Quick Ratio 4.
(e) Inventory Rs. 1,20,000, Current Liabilities Rs. 2,40,000, Quick Ratio 1.5
[Ans. (a) Rs. 4,00,000 (b) Rs. 3,00,000 (c) Rs. 5,00,000 (d) Rs. 1,80,000 (e) Rs.
4,80,000]
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Q.6 Calculate Quick Assets in each of the following alternative cases :
(a) Trade Receivable Rs. 4,20,000, Provision for Doubtful Debts Rs. 40,000, Inventory Rs. 2,00,000, Prepaid expenses Rs. 40,000,
Cash Balance Rs. 40,000, Bank Balance Rs. 80,000, Preliminary expenses Rs. 20,000, Marketable Securities Rs. 1,00,000, Long
term Investment Rs. 2,00,000
(b) Current Assets Rs. 10,00,000, Inventory Rs. 3,80,000, Prepaid Expenses Rs. 20,000, Preliminary expenses Rs. 40,000
(c) Quick Ratio 2.5, Current Liabilities Rs. 4,00,000
(d) Current Ratio 2.5, Current Liabilities Rs. 4,00,000, Inventory Rs. 2,00,000
[Ans. (a) Rs. 6,00,000 (b) Rs;. 6,00,000 (c) Rs. 10,00,000 (d) Rs. 8,00,000]
Q.7 Calculate Current Liabilities in each of the following alternative cases :
(a) Equity shares capital Rs. 2,00,000, Trade Payable Rs. 1,40,000, 18% Preference share capital Rs. 2,00,000, General Reserve Rs.
1,20,000, Outstanding expenses Rs. 40,000, Profit &Loss A/c Rs. 4,80,000,Bank Overdraft Rs. 20,000, 15% Debentures Rs.
16,00,000, Provision of tax Rs. 4,80,000
(b) Current Assets Rs. 3,00,000, Working capital Rs. 1,00,000
(c) Current Assets Rs. 5,00,000, Current Ratio 2.5
(d) Quick Assets Rs. 10,00,000, Quick Ratio 2.5
(e) Quick Assets Rs. 4,00,000, Inventory Rs. 2,00,000, Working capital Rs. 2,00,000
[Ans. (a) Rs. 6,80,000 (b) Rs. 2,00,000 (c) Rs. 2,00,000 (d) Rs. 4,00,000 (e) Rs. 4,00,000 ]
Q.8 Calculate Current Assets, Quick Assets and Current Liabilities in each of the following alternative cases :
(a) Current Ratio 2.5. Working capital Rs. 1,20,000, Inventory Rs. 20,000
(b) Current Ratio 3, Working capital Rs. 4,00,000, Inventory Rs. 4,40,000
[Ans. CA QA CL
(a) Rs. 2,00,000 1,80,000 80,000

(b) Rs. 6,00,000 1,60,000 2,00,000
Q.9 Calculate Current Assets, Quick Assets and Current Liabilities in each of the following alternative cases :
(a) Quick Ratio 2.25, Working capital Rs. 1,20,000, Inventory Rs. 20,000
(b) Liquid Ratio 1.5, Working capital Rs. 2,40,000, Inventory Rs. 1,60,000
[Ans. CA QA CL
(a) Rs. 2,00,000 1,80,000 80,000

(b) Rs. 4,00,000 2,40,000 1,60,000
Q.10 Calculate Current Liabilities, Quick Assets and Inventory in each of the following alternative cases :

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(a) Current Ratio 2.5, Quick Ratio 1.5, Current Assets Rs. 4,00,000
(b) Current Ratio 2, Quick Ratio 0.75, Current Assets Rs. 6,00,000
(c) Current Ratio 3, Quick Ratio 1, Current Assets Rs. 36,00,000
[Ans. CL QA Inventory
(a) Rs. 1,60,000 2,40,000 1,60,000

(b) Rs. 3,00,000 2,25,000 3,75,000
(c) Rs. 12,00,000 12,00,000 24,00,000
Q.11 Calculate Current Assets, Liquid Assets and Inventory in each of the following alternative cases :
(a) Current Ratio 2, Acid-test Ratio 0.75, Current Liabilities Rs. 3,00,000
(b) Current Ratio 3, Liquid Ratio 1, Current Liabilities Rs. 12,00,000
(c) Current Ratio 2, Quick Ratio 1.5, Current Liabilities Rs. 1,60,000
(d) Current Ratio 2.5, Liquid Ratio 1.5, Current Liabilities Rs.80,000
[Ans. CA QA Inventory
(a) Rs. 6,00,000 2,25,000 3,75,000

(b) Rs. 36,00,000 12,00,000 24,00,000
(c) Rs. 3,20,000 2,40,000 80,000
(d) Rs. 2,00,000 1,20,000 80,000
Q.12 Calculate Current Assets, Current Liabilities and Quick Assets in each of the following alternative cases :
(a) Current Ratio 4.5, Quick Ratio 3, Inventory Rs. 72,000
(b) Current Ratio 4, Liquid Ratio 2.5, Inventory Rs. 12,00,000
(c) Current Ratio 4.5, Quick Ratio 3, Inventory Rs. 1,44,000
(d) Current Ratio 4, Quick Ratio 2.5, Inventory Rs. 45,000
[Ans. CA CL QA
(a) Rs. 2,16,000 48,000 1,44,000

(b) Rs. 32,00,000 8,00,000 20,00,000
(c) Rs. 4,32,000 96,000 2,88,000
(d) Rs. 1,20,000 30,000 75,000
Q.13 Calculate Current Assets, Quick Assets and Inventory in each of the following alternative cases :
(a) Current Ratio 3, Quick Ratio 1.2, Working capital Rs. 3,60,000
(b) Current Ratio 3, Liquid Ratio 1, Working capital Rs. 4,00,000

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(c) Current Ratio 2.5, Quick Ratio 1.5, Working capital Rs. 2,40,000
(d) Current Ratio 2, Quick Ratio 0.75, Working capital Rs. 3,00,000
(e) Current Ratio 2, Quick Ratio 1.5, Working capital Rs. 1,60,000
[Ans. CA QA Inventory
(a) Rs. 5,40,000 2,16,000 3,24,000

(b) Rs. 6,00,000 2,00,000 4,00,000
(c) Rs. 4,00,000 2,40,000 1,60,000
(d) Rs. 6,00,000 2,25,000 3,75,000
(e) Rs. 3,20,000 2,40,000 80,000
Q.14 (a) The current ratio of a company is 2:1. State giving reasons which of the following transactions would (i) improve (ii)
reduce (iii) not alter, the current ratio.
(a) Repayment of current liability, (b) Purchasing goods on credit, (c) sales of an office typewriter (book value Rs. 8,000) for
Rs. 6,000 only, (d) Sale of merchandise (cost Rs. 20,000) for Rs. 22,000, (e) Payment of dividend
{Ans. [a] (i), [b] (ii), [c] (i), [d] (i), [e] (i) }
[b] The current ratio of company is 0.8:1, State giving reasons which of the following transactions would (i) improve (ii)
reduce (iii) not change the current ratio
(a) Payment of a current liability (b) Purchasing goods on credit, (c) Sale of an office type-writer (book value Rs. 8,000) at a
loss of Rs. 6,000, (d) Sale of merchandise (cost Rs. 20,000) at a profit of Rs. 2,000 (e) Purchase of goods for cash
{Ans. [a] (ii), [b] (i), [c] (i), [d] (i), [e] (iii) }
Q.15 The Quick Ratio of a company is 2:1, State giving reasons which of the following transactions would (i) improve (ii)
reduce (iii) not change, the Quick Ratio:
(a) Purchase of goods for cash, (b) Purchase of goods on credit, (c) Sale of goods (costing Rs. 20,000) for Rs. 20,000 (d) Sale of
goods (costing Rs. 20,000) for Rs. 22,000 (e) Cash received from debtors
{Ans. [a] (ii) [b] (ii) [c] (i) [d] (i) [e] (iii) }
Q.16 The ratio of Current Assets (Rs. 12,00,000) to Current Liabilities is 1.5:1. The accountant of this firm is interested in
maintaining a current ratio of 2:1 by paying some part of current liabilities. You are require to suggest him the amount of
current liabilities which must be paid to this purpose :
[Ans. Rs. 4,00,000]
Q.17 The ratio of current assets to current liabilities (Rs. 8,00,000) is 2.5:1. The accountant of this firm is interested in
maintaining a current ratio of 2:1 by acquiring some current assets on credit. You are require to suggest him the amount of
current assets which must be acquired for this purpose :
[Ans. Rs. 4,00,000]
Q.18 A firm had current assets of Rs. 3,00,000. It then paid a current liability of Rs. 60,000. After this payment the current
ratio was 2:1. Determine the size of current liabilities and working capital before and after the payment was made:

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[Ans. CL Rs. 1,80,000, Rs. 1,20,000; WC Rs. 1,20,000, Rs. 1,20,000]
Q.19 A firm had current liabilities of Rs. 1,80,000. It then acquire stock-in-trade at a cost of Rs. 20,000 on credit. After this
payment the current ratio was 2:1. Determine the size of current assets and working capital before and after the stock was
acquired:
[Ans. CA Rs. 3,80,000, Rs. 4,00,000; WC Rs. 2,00,000, Rs. 2,00,000]
Q.20 Assuming the Current Ratio of Tina Ltd. Is I – 2:1, II – 1:1, III – 0.8:1, State giving the reasons which of the following
transactions would (i) improve (ii) reduce (iii) not alter the Current Ratio
(a) Payment of current liability
(b) Purchase of goods on credit
(c) Sale of a fixed asset (having book value Rs. 8,000) at a loss of Rs. 7,000
{Ans. Case I [a] (i), [b] (ii), [c] (i), Case II [a] (iii), [b] (iii), [c] (i) ; Case III [a] (ii), [b] (i), [c] (i) }
Q.21 Tisha Ltd. has a current ratio of 2:1 and Quick Ratio of 1.5:1. Give an example of each transaction having the effect of :
(a) Increase in current ratio and Quick Ratio
(b) Increase in current ratio but no change in quick ratio
(c) Decrease in current ratio and quick ratio
(d) Decrease in current ratio but increase in quick ratio
(e) Decrease in current ratio but no change in quick ratio
(f) Increase in quick ratio but no change in current ratio
(g) Decrease in quick ratio but no change in current ratio
(h) No change in current ratio and quick ratio
Q. 22 From the following, Calculate Debt-Equity Ratio, Total Assets to Debt Ratio and Proprietary Ratio.
Equity share capital Rs. 3,00,000, Preference share capital Rs. 1,00,000, General Reserve Rs. 2,00,000, Accumulated Profits
Rs. 1,20,000, Debentures Rs. 3,00,000, Trade Payable Rs. 1,60,000, Expenses Payable Rs. 40,000, Preliminary expenses not
yet written off Rs. 20,000
[Ans. 3:7, 4:1, 58.33%]
Q.23 Calculate Debt –Equity Ratio, Total Assets to Debt Ratio and Proprietary Ratio from the following particulars :
Particulars Amount Particulars Amount

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1,60,000 equity shares of Rs. 10 Land & Building 12,40,000

each, fully paid up
16,00,000 Plant & Machinery 24,00,000
8,000, 11% redeemable pref.
share of Rs. 100 each fully paid Furniture & Fitting 3,60,000
up
8,00,000 Inventory 10,60,000
Trade Receivable 12,10,000
Cash in hand 1,30,000

Securities Premium Account
1,60,000 Cash at bank 6,00,000
General Reserve
12,00,000 Preliminary expenses 40,000
Profit & Loss Account
2,80,000
20,000, 12% convertible

debenture of Rs. 100 each, fully
paid up
20,00,000
Trade Payable
4,40,000
Outstanding expenses
1,20,000
Provision for tax
4,40,000
Total
70,40,000 Total 70,40,000

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[Ans. 1:2, 3.5:1, 57.14%]
Q.24 From the following, Calculate Debt –Equity Ratio, Total Assets to Debt Ratio and Proprietary Ratio.
10% Pref. Share Capital Rs. 10,00,000, Equity Share Capital Rs. 30,00,000, Securities Premium Rs. 2,00,000, Reserve &
Surplus Rs. 11,60,000, Loan from I.D.B.I. Rs. 60,00,000,. Trade Payable Rs. 2,00,000, Current Liabilities Rs. 12,00,000
[Ans. 5:4, 2:1, 40%]
Q.25 Calculate Total Assets to Debt Ratio in each of the following alternative cases :
(a) Long term debt Rs. 16,00,000, Long term funds Rs. 24,00,000, Total Assets Rs. 32,00,000
(b) Long term funds Rs. 18,00,000, Shareholder’s fund Rs. 6,00,00, Current Liabilities Rs. 6,00,000
(c) Total Debt Rs. 18,00,000, Capital Employed Rs. 22,00,000, Current Liabilities Rs. 2,00,000
[Ans. (a) 2:1, (b) 2:1, (c) 3:2]
Q.26 Calculate Proprietary Ratio in Question 25.
[Ans. (a) 25% (b) 25% (c) 25%]
Q.27 From the following calculate (a) Debt Equity Ratio (b) Total Assets to Debt Ratio (c) Proprietary Ratio
Net Fixed Assets Rs. 20,00,000, Long-term Trade Investment Rs. 2,00,000, Current Assets Rs. 8,80,000, Underwriting
commission Rs. 80,000, Equity share capital (Rs. 10 each) Rs. 2,00,000, 18% preference share capital Rs. 2,00,000, Reserve
Rs. 3,20,000, P&L A/c (opening balance) Rs. 4,00,000, 15%debentures of Rs. 16,00,000, Current Liabilities Rs. 6,80,000
[Ans. (a) 2:1, (b) 1.95:1 (c) 25.97%]
Q.28 The Debt-Equity Ratio of a company is 1:2. Which of the following suggestions would (i) increase, (ii) decrease and (iii)
not change
(a) Issue of equity share
(b) Cash received from debtor
(c) Redemption of debenture for cash
(d) Purchase goods on credit
(e) Redemption of debenture by conversion into shares
{Ans. [a] (ii), [b] (iii), [c] (ii), [d] (iii), [e] (ii) }
Q.29 Calculate Long-term Debt in each of the following alternative cases :
(a) Secured Loans Rs. 20,00,000, Unsecured loan Rs. 4,00,000, Current Liabilities Rs. 1,00,000
(b) 15%debentures Rs. 10,00,000, Loan from ICICI Rs. 4,00,000, Public deposits (Maturing after 2 years) Rs. 6,00,000, Current
Liabilities Rs. 1,00,000
(c) Total Debt Rs. 18,00,000, Short terms debt Rs. 2,00,000
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(d) Total Debt Rs. 13,00,000, Current Liabilities Rs. 1,00,000
(e) Total Debt Rs. 10,00,000, Current Ratio 2, Current Assets Rs. 4,00,000
(f) Total Debt Rs. 6,00,000, Quick Ratio 2, Quick Assets Rs. 4,00,000
[Ans. (a) Rs. 24,00,000 (b) Rs. 20,00,000 (c) Rs. 16,00,000 (d) Rs. 12,00,000 (e) Rs. 8,00,000 (f) Rs. 4,00,000 ]
Q.30 Calculate shareholder’s funds in each of the following alternative cases :
(a) Equity share capital Rs. 4,80,000, 18%preference share capital Rs. 2,00,000, Reserve & surplus Rs. 6,00,000, securities
premium Rs. 1,00,000
(b) Equity share capital Rs. 2,00,000, 18% preference share capital Rs. 4,00,000 net reserve & surplus Rs. 6,00,000
(c) Equity shareholder’s funds Rs. 8,00,000, 18%preference share capital Rs. 4,00,000, Reserve & surplus Rs. 12,00,000
(d ) Capital employed Rs. 24,00,000, long term debts Rs. 16,00,000
[Ans. (a) Rs. 8,00,000 (b) Rs. 16,00,000 (c) Rs. 16,00,000 (d) Rs. 8,00,000 ]
Q.31 Calculate Capital Employed in each of the following alternative cases :
(a) Total Assets Rs. 26,00,000, Current Liabilities Rs. 2,00,000, Current Assets Rs. 8,00,000
(b) Net Fixed Assets Rs. 18,00,000, Working capital Rs. 6,00,000, Current Assets Rs. 8,00,000
(c) Shareholder’s fund Rs. 10,00,000, Long term debt Rs. 20,00,000
[Ans. (a) Rs. 24,00,000 (b) Rs. 24,00,000 (c) Rs. 30,00,000
Q.32 (i) Calculate Debt Equity Ratio in each of the following alternative cases :
(a) Shareholder’s fund Rs. 8,00,000, Long term debts Rs. 16,00,000, Current Liabilities Rs. 8,00,000
(b) Capital employed Rs. 24,00,000, long term debt Rs. 16,00,000, current liabilities Rs. 8,00,000
(c) Capital employed Rs. 8,00,000, shareholder’s fund Rs. 2,00,000, current liabilities Rs. 10,00,000
(d) Total Debt Rs. 9,00,000, capital employed Rs. 12,00,000, current liabilities Rs. 1,00,000
(e) Total Assets Rs. 2,60,000, Total Debt Rs. 1,80,000, Current liabilities Rs. 20,000
[Ans. (a) 2:1 (b) 2:1 (c) 3:1 (d) 2:1 (e) 2:1]
(ii) Calculate Total Assets to Debt Ratio in Question 32 (i)
[Ans. (a) 2:1 (b) 2:1 (c) 3:1 (d) 13:8 (e) 13:8
Q.33 Capital employed Rs. 6,00,000 Net Revenue from operation Rs. 24,00,000, Calculate capital turnover ratio
[Ans. 4 times]

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Q.34 Net Fixed Assets Rs. 3,00,000, Trade investments Rs. 20,000, Current Assets Rs. 1,30,000, Current liabilities Rs. 50,000,
Cash Revenue from operation Rs. 2,00,000, Credit Revenue from operation Rs. 6,04,000, Revenue from operation return Rs.
4,000, Calculate Capital Turnover
[Ans. 2 times]
Q.35 Net Fixed Assets Rs. 4,00,000, Net Working capital Rs. 2,00,000. Cost of Revenue from Operation Rs. 20,00,000, Gross
Profit Rs. 4,00,000. Calculate Capital Turnover Ratio
[Ans. 4 times]
Q.36 Shareholder’s funds Rs. 4,00,000, Long-term debt Rs. 8,00,000, Gross Profit @20% on cost was Rs. 8,00,000. Calculate
Capital Turnover Ratio
[Ans. 4 times]
Q.37 Net Fixed Assets Rs. 2,00,000, Net Revenue from operation Rs. 10,00,000. Calculate Fixed Assets Turnover Ratio
[Ans. 5 times]
Q.38 Fixed Assets (at cost) Rs. 7,00,000, Accumulated Depreciation till date Rs. 1,00,000, Credit Revenue from operation Rs.
17,00,000. Cash Revenue from operation Rs. 1,50,000, Revenue from operation Return Rs. 50,000. Calculate Fixed Assets
Turnover Ratio
[Ans. 3 times]
Q.39 The following details have been given to you for X Ltd. for 2 years. You are required to find out Fixed Assets Turnover
Ratio and comment on it.
2019 2018
Fixed Assets at written down value Rs. 3,00,000 Rs. 6,00,000
Cost of Revenue from operation Rs. 12,00,000 Rs.18,00,000
[Ans. 4 times, 3 times]
Q. 40 Net working capital Rs. 4,00,000. Net Revenue from Operation Rs. 12,00,000. Calculate Working Capital Turnover Ratio
[Ans. 3 times]
Q.41 Current Assets Rs. 6,00,000, Current Liabilities Rs. 1,20,000, Credit Revenue from Operation Rs. 12,00,000, Cash
Revenue from Operation Rs. 2,60,000, Revenue from operation Return Rs. 20,000. Calculate Working Capital Turnover Ratio
[Ans. 3 times]
Q.42 Cost of Revenue from Operation Rs. 3,00,000, Current Assets Rs. 2,00,000, Current Liabilities Rs. 1,50,000. Calculate
Working Capital Turnover Ratio
[Ans. 6 times]

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Q.43 Capital Employed Rs. 6,00,000, Net Fixed Assets Rs. 4,00,000, Cost of Revenue from Operation Rs. 20,00,000, Gross
Profit Rs. 4,00,000. Calculate Working Capital Turnover Ratio
[Ans. 12 times]
Q.44 Shareholder’s fund Rs. 4,00,000, Long term Debt Rs. 8,00,000, Net Fixed Assets Rs. 8,00,000. Gross Profit at 20% on
cost was Rs. 8,00,000. Calculate Working Capital Turnover Ratio
[Ans. 12 times]
Q.45 Calculate Inventory Turnover Ratio from the data given below:
Inventory at the beginning of the year Rs. 40,000, Inventory at the end of the year Rs. 20,000, Purchase Rs. 1,00,000,
Carriage Inward Rs. 10,000. Total Revenue from Operation Rs. 2,00,000, Cash Revenue from operation Rs. 20,000
[Ans. 4.33 times]
Q.46 Cost of Revenue from Operation Rs. 18,00,000, Opening Inventory Rs. 5,00,000, Closing Inventory Rs. 7,00,000.
Calculate Inventory Turnover Ratio
[Ans. 3 times]
Q.47 Opening Inventory Rs. 1,52,500, Closing Inventory Rs. 1,97,000, Revenue from Operation Rs. 10,40,000, Revenue from
operation return Rs. 40,000, Purchases Rs. 6,44,500, Calculate Inventory Turnover Ratio
[Ans.3.43 times]
Q.48 Opening Inventory Rs. 25,000, Closing Inventory Rs. 19,400, Purchases Rs. 1,05,000, Wages Rs. 2,400, Carriage inward
Rs. 3,000. Calculate Inventory Turnover Ratio
[Ans. 5.23 times]
Q.49 From the following information, Calculate Inventory Turnover Ratio
Particulars Rs. Particulars Rs.
To opening inventory 36,000 By revenue from operation 1,97,000 [Ans. 3.33

times]
To purchase 1,35,400 By closing inventory 50,000
Q.50
To carriage inward 6,000 Opening
Inventory
To wages 16,000 Rs.
58,000,
To Gross Profit 53,600 Closing
Inventory
Total 2,47,000 Total 2,47,000
62,000,
Cost Of
Revenue
From
Operation Rs. 6,40,000, Gross Profit 25% On Revenue From Operation. Calculate Inventory Turn Over Ratio

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[Ans. 8 times]
Q.51 Purchases Rs. 3,04,000, Closing Inventory Rs. 42,000, Cost Of Revenue From Operation Rs. 3,00,000, Gross Profit 25%
On Revenue From Operation. Calculate Inventory Turn Over Ratio.
[Ans. 7.5 times]
Q.52 Opening Inventory Rs. 58,000, Closing Inventory Rs. 62,000, Revenue From Operation Rs. 6,40,000, Gross Profit 25% On
Cost. Calculate Inventory Turn Over Ratio.
[Ans. 8.53 times]
Q.53 Opening Inventory Rs. 75,000, Purchases Rs. 6,50,000, Revenue From Operation Rs. 8,00,000, Gross Profit 20% On
Revenue From Operation. Calculate Inventory Turnover Ratio.
[Ans. 8 times]
Q. 54 Closing Inventory Rs. 1,70,000, Purchases Rs. 13,00,000, Revenue from Operation Rs. 16,00,000, Gross Profit 25% On
Cost. Calculate Inventory Turn Over Ratio.
[Ans. 8 times]
Q.55 Cost Of Goods Sold Rs. 2,00,000, Inventory Turn Over Ratio 4 Times , Closing Inventory Was Rs, 20,000 In Excess of
Opening Inventory. Calculate Opening Inventory And Closing Inventory
[Ans. Rs. 40,000, Rs, 60,000]
Q.56 Total Revenue from operation Rs 4,00,000 Gross Profit @25% On Revenue from operation , Inventory Turn Ratio 5
Times, Closing Inventory Is More by Rs. 8,000 Than The Opening Inventory. Calculate Opening Inventory And Closing
Inventory
[Ans. Rs. 56,000, Rs. 64,000]
Q,57 Total Revenue from Operation Rs. 10,00,000. Gross Profit 33 1/3% on cost, Inventory turnover ratio 5 times, Closing
Inventory is more by Rs. 8,000 than the opening inventory. Calculate opening inventory and closing inventory
[Ans. Rs. 1,40,000 and Rs. 1,60,000]
Q.58 Inventory turnover ratio 6 times, Gross Profit @20% on revenue from operation was Rs. 3,60,000, Closing Inventory Rs.
30,000 in excess of opening inventory. Calculate opening inventory and closing inventory
[Ans. Rs. 1,12,500 and Rs. 1,27,500]
Q.59 Inventory turnover ratio 6 times, Gross Profit @25% on revenue from operation was Rs. 7,20,000, Closing Inventory Rs.
60,000 in excess of opening inventory. Calculate opening inventory and closing inventory
[Ans. Rs. 4,50,000 and Rs. 5,10,000]
Q.60 Rs. 4,00,000 is the cost of revenue from operation of a concern during 2004. Inventory turnover is 8 times. Inventories
at the end is 1.5 times than in the beginning. Calculate opening and closing inventories
[Ans. 40,000, Rs. 60,000]

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Q.61 Rs. 4,00,000 is the cost of revenue from operation of a concern during 2004. Inventory turnover is 8 times. Inventories
at the end is 1.5 times more than that in the beginning. Calculate opening and closing inventories
[Ans. 28,572, Rs. 71,428]
Q.62 Net credit revenue from operation Rs. 2,00,000, Average Debtor Rs. 50,000. Calculate Debtor Turnover Ratio and
Average Debt Collection Period
[Ans. 4 times, 3 months]
Q.63 Total Revenue from operation Rs. 4,00,000, Cash revenue from operation Rs. 80,000, Debtors in the beginning Rs.
40,000, Debtors at the end Rs. 1,20,000. Calculate Debtor Turnover Ratio and Average Debt Collection Period
Q.64 Total Revenue From Operation Rs. 20,00,000, Credit Sales Rs. 18,00,000, Revenue From Operation Returns Rs.
2,00,000, Debtors In The Beginning Rs. 1,60,000 Debtors At The End Rs. 2,40,000. Calculate Debtor Turnover Ratio and
Average Debt Collection Period
[Ans. 8 times, 1.5 months]
Q. 65 Revenue From Operation Rs. 1,70,000, Debtors In The Beginning Rs. 36,000 Debtors At The End Rs. 28,000. Calculate
Debtor Turnover Ratio and Average Debt Collection Period
[Ans. 5.31 times, 2.25 months]
Q. 66 Credit Revenue From Operation Rs. 9,30,000, Opening Debtors Rs. 1,80,000, Closing Debtors Rs. 1,92,000. Calculate
Debtor Turnover Ratio and Average Debt Collection Period
Q. 67 Total Revenue From Operation Rs. 2,40,000 Debtors Rs. 24,000 Bills Receivable Rs. 16,000. Calculate Debtor Turnover
Ratio and Average Debt Collection Period
Q. 68 (a) Calculate Debt Collection Period of X Ltd. for the year ending 31 st March,2019 :
Rs.
Revenue form operation during the year 2018-2019 7,30,000
Debtors as on 31.3.2019 85,000
Bills Receivable 15,000
(b) Compute Debtors turnover ratio and Average Collection Period of Y Ltd. for the year ending 31 st March, 2019 :
Rs.
Net credit revenue from operation 2018-19 16,00,000
Opening Trade Debtors as on 1-4-2018 3,60,000

12
Closing Trade Debtors as on 31-3-2019 2,80,000
The sixty days credit is common to the industry to which the company belongs. State whether the debts are being collected
efficiently or not.
[Ans. (a) 50 days (b) 5 times, 73 days, debt collection is unsatisfactory]
Q. 69 New Credit Revenue From Operation Rs. 3,50,000 Debtors At The End Rs. 14,000 More Than That At The Beginning.
Debtors In The Beginning Rs. 36,750. Calculate Debtor Turnover Ratio and Average Debt Collection Period
Times More Than That In The Beginning. Debtors In The Beginning Rs. 40,000. Calculate Debtor Turnover Ratio and Average
Debt Collection Period
Q. 71 Net Credit Revenue From Operation Rs. 4,20,000 Debtors at The are 1.5 times More Than That In Beginning. Debtors In
The Rs. 40,000. Calculate Debtor Turnover Ratio and Average Debt Collection Period
Q. 72 A Firm Normally Has Debtors Equal To Two Months Credit Revenue From Operation. Calculate Debtor Turnover Ratio.
[Ans. 6 times]
Q. 73 Calculate the Debtors Turnover Ratio and Average Debt Collection period from the following information :
1.4.2018 1.4.2019
Sundry Debtors Rs. 56,000 Rs. 50,000
Bills Receivable Rs. 14,000 Rs. 30,000
Provision for doubtful debts Rs. 5,600 Rs. 5,000
Total revenue from operation Rs. 2,00,000, Revenue from operation return Rs. 3,000. Cash Revenue from operation Rs.
47,000
Q. 74 Net Credit Revenue From Operation Rs. 3,50,000. Debtors Turn Over Ratio 8 Times, Debtors At The End Rs. 14,000
More Than That At The Beginning. Calculate Opening And Closing Debtors
[Ans. Rs.36,750, Rs. 50,750]
Q. 75 Net Credit Revenue From Operation Rs. 4,00,000, Debtors Turnover 8 Times, Debtors At The End are 1.5 Times That in
Beginning. Calculate Opening and Closing Debtors
[Ans. Rs. 40,000, Rs. 60,000]
Q.76 Net credit sale Rs. 4,20,000, Debtor Turnover 6times, Debtors At The End are 1.5 Times more than that in Beginning.
Calculate Opening and Closing Debtors

13
[Ans. Rs. 40,000, Rs. 1,00,000]
Q.77 A firm normally has debtors equal to 2 months’ credit revenue from operation. During the coming years, it expects
credit revenue from operation of Rs. 14,40,000 spread evenly over the year. What is the estimated amount of debtors at the
end?
[Ans. Rs. 2,40,000]
Q.78 A firm normally has debtors equal to 1 month credit revenue from operation. During the coming years, it expects credit
revenue from operation of Rs. 9,60,000 spread evenly over the year. Calculate Debtors Turnover, Average Debtors, Opening
debtors and closing debtors if debtors at the end are more than that at the beginning by Rs.12,000
[Ans. 12 times, Rs. 80,000, Rs. 74,000, Rs. 86,000]
Q.79 Net credit sales Rs. 8,00,000, Average Debt Collection Period 1.5 months, Debtors at the end are 1.5 times than that in
the beginning. Calculate Debtors Turnover, Average Debtors, Opening and closing debtors
[Ans. 8 times, Rs. 1,00,000, Rs. 80,000 and Rs. 1,20,000]
Q.80 Net Revenue from operation Rs. 6,00,000, Gross Profit Rs. 84,000. Calculate Gross Profit Ratio
[Ans. 14%]
Q.81 Cash revenue from operation Rs. 4,20,000, Credit revenue from operation Rs. 6,00,000, Revenue from operation return
Rs. 20,000, Cost of revenue from operation Rs. 8,00,000. Calculate Gross Profit Ratio
[Ans. 20%]
Q.82 Average inventory Rs. 1,60,000, Inventory turnover ratio 6 times, selling price 25% above cost. Calculate Gross Profit
Ratio
[Ans. 20%]
Q.83 Opening inventory Rs. 30,000, Closing inventory Rs. 24,000, Purchase Rs. 1,50,000, Return outward RS. 6,000, Wages
Rs. 86,000, Cash revenue from operation Rs. 90,000, Return inward Rs. 10,000, Credit revenue from operation Rs. 2,00,000.
Calculate Gross Profit Ratio
[Ans. 15.7%]
Q.84 Opening inventory Rs. 1,20,000, Closing inventory Rs. 2,00,000, Inventory Turnover ratio 8 times, selling price
25%above cost. Calculate the amount of gross profit and gross profit ratio
[Ans. Rs. 3,20,000; 20%]
Q.85 A trader carries an average inventory of Rs. 1,60,000. His inventory turnover ratio is 8 times. If he sell goods at a profit
of 20%on sales. Find out his profit
[Ans. 3,20,000]
Q.86 Net Revenue from operation Rs. 6,00,000, operating profit Rs. 90,000. Calculate operating profit ratio.
[Ans. 15%]

14
Rs. 20,000, operating cost Rs. 9,00,000. Calculate operating profit ratio.
[Ans. 10%]
Q.88 Net revenue from operation Rs. 6,20,000, Purchases Rs. 2,00,000, Cost of revenue from operation Rs. 3,60,000, office &
adm. Expenses Rs. 70,000, selling &distribution expenses Rs. 66,000, Revenue from operation return Rs. 20,000, interest on
debenture Rs. 62,000. Calculate operating profit ratio
[Ans. 20%]
Q.89 Net revenue from operation Rs. 8,10,000, cost of revenue from operation Rs. 5,20,000, operating expenses Rs.
2,09,000. Calculate operating profit ratio
[Ans. 10%]
Q.90 Operating ratio 80%. Calculate operating profit ratio
[Ans. 20%]
Q. 91 Net revenue from operation Rs. 8,00,000,Gross profit Rs. 2,00,000, Cash revenue from operation Rs. 20,000, office &
selling expenses Rs. 1,20,000. Calculate operating profit ratio
[Ans. 10%]
Q.92 Net revenue from operation Rs. 6,00,000. Net profit Rs. 1,20,000. Calculate Net Profit Ratio
[Ans. 20%]
Q.93 Cash revenue from operation Rs. 4,20,000, Credit revenue from operation Rs. 6,00,000, Revenue from operation
return Rs. 20,000, Gross Profit Rs. 2,00,000, operating expenses Rs. 50,000. Non-operating income Rs. 60,000, Non-operating
expenses Rs. 10,000, Calculate Net Profit Ratio
[Ans. 20%]
Q.94 Net revenue from operation Rs. 16,20,000, cost of revenue from operation Rs. 10,40,000, operating expenses Rs.
4,18,000. Interest on debenture Rs. 81,000, profit on sale of a fixed assets Rs. 1,62,000. Calculate Net Profit Ratio
[Ans. 15%]
Q.95 Net revenue from operation Rs. 6,20,000, Purchases Rs. 1,60,000, Cost of revenue from operation Rs. 3,60,000, office &
adm. Expenses Rs. 70,000, selling &distribution expenses Rs. 66,000, Revenue from operation return Rs. 20,000, interest on
debenture Rs. 62,000, profit on sale of land & building Rs. 1,24,000, Provision for tax 50%. Calculate net profit ratio
[Ans. 30% or 15%]
Q.96 Net revenue from operation Rs. 6,00,000, operating cost Rs. 4,50,000. Calculate operating ratio.
[Ans. 75%]
Rs. 20,000, Cost of revenue from operation Rs. 7,00,000, office & selling expenses Rs. 2,00,000. Calculate operating ratio

15
[Ans. 90%]
Q.98 Net revenue from operation Rs. 8,40,000, Revenue from operation return Rs. 40,000, Purchases Rs. 2,00,000, Cost of
revenue from operation Rs. 4,40,000, office & selling expenses Rs. 2,32,000. Calculate operating ratio
[Ans. 80%]
Q.99 Net revenue from operation Rs. 8,00,000, Cash revenue from operation Rs. 2,00,000, Gross Profit Rs. 2,00,000, office &
selling expenses Rs. 1,20,000. Calculate operating ratio
[Ans. 90%]
Q.100 Calculate operating ratio if operating profit ratio is 85%
[Ans. 15%]
Q.101 Following is the Trading & Profit & Loss Account of a firm for the year ending 31 st March, 2018 :

16
Particulars Rs. Particulars Rs.
Opening Inventory 70,000 Sales 8,00,000
Purchases 4,50,000 Inventory at the end 1,00,000
Wages 12,000
Gross Profit 3,68,000
9,00,000 9,00,000
Office adm. Expenses 20,000 Gross profit 3,68,000
Selling &Distribution exp. 28,000 Profit on sale of
Marketable securities 12,000
Loss on sale of plant 20,000 Profit on sale of land &
Building 8,000
Bad debts 2,000
Discount allowed 4,000
Interest on bills payable 6,000
Interest on long term loans 8,000
Net profit 3,00,000
3,78,000 3,78,000
Calculate Operating Ratio
[Ans. 61.5%]

17
Q.102 Net profit before interest & tax Rs. 6,00,000. Total Assets Rs. 30,00,000. Calculate Return on Total Assets
[Ans. 20%]
Q.103 Net profit before interest & tax Rs. 6,00,000, Capital Employed Rs. 24,00,000. Calculate Return on Investment
[Ans. 25%]
Q.104 Net profit before interest & tax Rs. 12,00,000, Net fixed assets Rs. 40,00,000, Net working capital Rs. 20,00,000,
Current Assets Rs. 22,00,000. Calculate Return on Investment
[Ans. 20%]
Q.105 Net profit before interest & tax Rs. 8,00,000, 15% long-term debt Rs. 16,00,000, Shareholder’s fund Rs. 8,00,000.
Calculate Return on Investment
[Ans. 33.33%]
Q.106 Net profit after interest but before tax Rs. 2,80,000, 15% long-term debt Rs. 8,00,000, Shareholder’s fund Rs. 4,00,000.
Tax Rate 50%. Calculate Return on Investment
[Ans. 33.33%]
Q.107 Net profit after interest & tax Rs. 1,00,000, 15% long-term debt Rs. 8,00,000, Shareholder’s fund Rs. 4,80,000. Tax
Rate 50%. Calculate Return on Capital employed
[Ans. 25%]
Q.108 Net profit after interest & tax Rs. 2,00,000, Current Assets Rs. 8,00,000, Current Liabilities Rs. 4,00,000, Tax Rate 50%,
Fixed Assets Rs. 12,00,000, 10% long-term debt Rs. 8,00,000. Calculate return on investment
[Ans. 30%]
Q.109 Fixed Assets Rs. 10,00,000, Trade Investment Rs. 2,00,000, Current Assets Rs. 12,00,000, Land & Building Rs. 2,00,000,
Inventory Rs. 2,00,000, Creditors Rs. 2,00,000, Current Liabilities Rs. 4,00,000, Preliminary expenses Rs. 20,000, Net profit
after interest but before tax Rs. 2,00,000, 10% long term loan Rs. 2,00,000. Calculate return on investment
[Ans. 11%]
Q.110 Calculate return on investment from the following details :
Net profit after tax Rs. 13,00,000, Rate of income tax 50%, 12.5% convertible debenture of Rs. 100 each, fully paid up Rs.
16,00,000, Fixed assets at cost Rs. 49,20,000, depreciation upto date Rs. 9,20,000, current assets Rs. 30,00,000, current
liabilities Rs. 14,00,000
[Ans. 50%]
Q.111 Compute return on capital employed from the following details :
Net profit after tax Rs. 4,00,000, Rate of income tax 50%, 10% debenture Rs. 10,00,000, share capital Rs. 20,00,000, opening
credit balance of profit and loss Account Rs. 5,00,000 opening balance of loss on issue of debenture Rs. 1,00,000
[Ans. 26.74%]
18
Additional Questions :
1. Debt Equity Ratio = 1.5 : 1 , Total Assets = Rs. 20,00,000 , Debt = Rs. 9,00,000 , Current Ratio = 3:1 ,
Quick Ratio = 2:1 , Opening Inventory twice the Closing Inventory , Inventory Turnover Ratio = 5 Times
, Gross Profit = 20% on sale , Cash Sales = 25% of Credit Sale , Average Trade Receivables = Rs.
10,00,000 , Calculate Trade Receivable Turnover Ratio (TRTR) .
( Ans. 37.50 Times )
2. Working Capital Turnover Ratio = 5 Times , TRTR = 6 times , Average Trade Receivables = Rs. 1,00,000 ,
Cash Sales = 25% of Total Sale , Current Ratio = 5:1 , Total Debt = Rs. 10,00,000 , Non Current
Assets = Rs. 15,00,000 . Calculate Debt Equity Ratio .
( Ans. 1.37 Times )
3. Capital Employed Rs. 10,00,000 , Debt Equity Ratio = 1.5 :1 , Debt = Rs. 6,00,000 , Non Current Asset =
Rs. 7,00,000 , Current Ratio = 4:1 , Quick Ratio = 2:1 , Trade Receivable Turnover ratio = 5 Times ,
Cash Sales = Rs. 3,00,000 , Working Capital Turnover Ratio = 4 Times , Gross Profit = 25% on Sale ,
Closing Inventory is twice the opening Inventory . Find Inventory Turnover Ratio and Average Trade Receivable .
(Ans. 6 Times and Rs. 1,80,000)
4. Closing Inventory = Rs. 6,00,000 , Current Ratio = 4:1 , Quick Ratio = 2:1 , Total Debt = Rs.
10,00,000 , Debt Equity Ratio = 1:1 . Find Total Assets to Debt Ratio .
( Ans. 17:7 )
5. Trade Receivable Turnover Ratio = 6 , Total sale = Rs. 12,00,000 , Cash Sale = 20% of Total Sale ,
Capital Employed = Rs. 15,00,000 , Non Current Assets = Rs. 9,00,000 , Current Ratio = 4:1 , Quick
Ratio = 2:1 , Gross Profit = 25% of sale , Closing Inventory is 3 times more than Opening Inventory . Finf
Inventory Turnover Ratio .
( Ans. 3.6 times )

19

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Future Institute of Commerce -98123-85797, 99919-09888

Only institute produce 500 plus merits in accountancy

Q.1 Calculate Current Ratio in each of the following alternative cases :

(a) Current Assets Rs. 2,00,000, Current Liabilities Rs. 1,00,000

(b) Current Assets Rs. 2,00,000, Working Capital Rs. 1,00,000

(c) Current Liabilities Rs. 2,00,000, Working Capital Rs. 1,00,000

Q.2 Calculate Quick Ratio in each of the following alternative cases :

(a) Quick Assets Rs. 2,00,000, Current Liabilities Rs. 1,00,000

[Ans. (a) 2:1 (b) 1.25:1 (c) 2:1 (d) 1.25:1

[Ans. Current Ratio 2:1 , Quick Ratio 1.5:1]

Q.5 Calculate Current Assets in each of the following alternative cases :

(b) Current Liabilities Rs. 2,00,000, Working Capital Rs. 1,00,000

(c) Current Liabilities Rs. 2,00,000, Current Ratio 2.5.

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Q.6 Calculate Quick Assets in each of the following alternative cases :

(c) Quick Ratio 2.5, Current Liabilities Rs. 4,00,000

Q.7 Calculate Current Liabilities in each of the following alternative cases :

(b) Current Assets Rs. 3,00,000, Working capital Rs. 1,00,000

(c) Current Assets Rs. 5,00,000, Current Ratio 2.5

(d) Quick Assets Rs. 10,00,000, Quick Ratio 2.5

(a) Rs. 2,00,000 1,80,000 80,000

(a) Rs. 2,00,000 1,80,000 80,000

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(c) Current Ratio 3, Quick Ratio 1, Current Assets Rs. 36,00,000

(a) Rs. 1,60,000 2,40,000 1,60,000

(b) Current Ratio 3, Liquid Ratio 1, Current Liabilities Rs. 12,00,000

(a) Rs. 6,00,000 2,25,000 3,75,000

(a) Current Ratio 4.5, Quick Ratio 3, Inventory Rs. 72,000

(b) Current Ratio 4, Liquid Ratio 2.5, Inventory Rs. 12,00,000

(c) Current Ratio 4.5, Quick Ratio 3, Inventory Rs. 1,44,000

(d) Current Ratio 4, Quick Ratio 2.5, Inventory Rs. 45,000

(a) Rs. 2,16,000 48,000 1,44,000

(b) Current Ratio 3, Liquid Ratio 1, Working capital Rs. 4,00,000

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(a) Rs. 5,40,000 2,16,000 3,24,000

[Ans. Rs. 4,00,000]

[Ans. Rs. 4,00,000]

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[Ans. CL Rs. 1,80,000, Rs. 1,20,000; WC Rs. 1,20,000, Rs. 1,20,000]

[Ans. CA Rs. 3,80,000, Rs. 4,00,000; WC Rs. 2,00,000, Rs. 2,00,000]

(a) Payment of current liability

(b) Purchase of goods on credit

(a) Increase in current ratio and Quick Ratio

(b) Increase in current ratio but no change in quick ratio

(c) Decrease in current ratio and quick ratio

(d) Decrease in current ratio but increase in quick ratio

(e) Decrease in current ratio but no change in quick ratio

(f) Increase in quick ratio but no change in current ratio

(g) Decrease in quick ratio but no change in current ratio

(h) No change in current ratio and quick ratio

[Ans. 3:7, 4:1, 58.33%]

Particulars Amount Particulars Amount

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1,60,000 equity shares of Rs. 10 Land & Building 12,40,000

Trade Receivable 12,10,000

Cash in hand 1,30,000

20,000, 12% convertible