PROBLEMS ON RATIO ANALYSIS

From the following information prepare Balance Sheet

Current Ratio 2.5,

Liquid Ratio 1.5
Proprietary Ratio, 0.75,
Working capital Rs.60,000,
Reserve and Surplus Rs.40,000,
Bank Overdraft Rs.10,000
There is no Long Term Loan or Fictitious Assets.

PROBLEM NO: II

Ratios relating Cosmos Ltd are given as follows:

Gross Profit Ratio: 15%
Stock Velocity 6 months
Debtors Velocity 3 months
Creditors Velocity 3 months
Gross Profit Rs. 60,000
Closing is equal to Opening Stock

Find out:

Sales
Closing Stock
Sundry Debtors
Sundry Creditors
PROBLEM 3

You have been furnished with the financial information of Progressive

Manufacturing Limited as under:
Balance sheet as on March 31

Liabilities Assets

Rs Rs

Equity share capital 10,00,000 Plant and 6,40,000

(Rs 100 each) equipment

Retained earnings 3,68,000 Land and building 80,000

Sundry creditors 1,04,000 Cash 1,60,000

Bills Payable 2,00,000 Sundry debtors

Rs 3,60,000

Other current 20,000 Less allowances 3,20,000

liabilities 40,000

Stock 4,80,000

Prepaid insurance 12,000

16,92,000 16,92,000

Statement of profit for the year ended March 31.

Sales Rs 40,00,000

Less cost of goods sold 30,80,000

Gross profit on sales 9,20,000

Less operating 6,80,000

expenses

Net profit 2,40,000

Less taxes (0.35) 84,000

 Net profit after taxes 1,56,000

Sundry debtors and stock at the beginning of the year were Rs 3,00,000 and Rs
4,00,000, respectively.

Determine the following ratios of M/S Progressive Manufacturing Ltd:

a. Current ratio
b. Acid test ratio
c. Stock turnover
d. Debtors’ turnover
e. Gross profit ratio
f. profit ratio
g. Operating ratio
h. Earnings per share (EPS)
i. Rate of return on equity capital

PROBLEM 4

From the following particulars, prepare the Balance Sheet of SR Ltd., as at March 31,
2015:

Current Ratio 2
Working Capital Rs.5,00,000
Capital Block to Current Assets 3:2
Fixed Asset to Turnover 2:3
Cash Sales/Credit Sales 2:3
Debentures/Share Capital 1:3
Stock Velocity 3 months
Creditors Velocity 3 months
Debtors Velocity 3 months
Gross Profit Ratio 30%
Capital Block: Equity Capital plus Debt
Capital
Net Profit 15% of Turnover
Reserve 5% of Turnover
PROBLEM 5

Using the following information, complete the Balance Sheet of PR Ltd., given below:

Acid Test Ratio : 0.90

Total Debt to Net Worth : 0.45:1
Turnover of Total Assets to Sales: 3:1
Gross Profit : 40%
Average Collection Period (Assume 360 days a year) : 30 days
Inventory Turnover Ratio 4 times
Balance Sheet of PR Ltd., as on ……………………..

Liabilities Amount Assets Amount

Rs. Rs.
Bills Payables ???? Cash ????
Equity Capital 2,30,000 Bills Receivables ????
Retained Earnings 3,70,000 Inventory ????
Plant & Machinery ????
Total ???? Total ????

PROBLEM 6

From the following information of SR Ltd., complete the proforma balance sheet if its
sales are Rs. 32,00,000.

Sales to Net worth : 2.3 times

Current Debt to Net Worth : 42%

Total Debt to Net worth : 75%

Net Sales to Inventory : 4.7 times

Current Ratio : 2.9 times

Average Collection Period : 64 days

Fixed Assets to Net worth : 53.2%

Liabilities Amount Assets Amount

Rs. Rs.
 Net worth ???? Fixed Assets ????
Long term Debt ???? Cash ????
Current Debt ???? Stock ????
Sundry Debtors ????
Total ???? Total ????

Problem 7

.From the data calculate:

a. Gross Profit Ratio

b. Net Profit Ratio
c. Return on Total Assets
d. Inventory Turnover
e. Working Capital Turnover
f. Net worth to Debt

Sales 25,20,000 Other Current Assets 7,60,000

Cost of sale 19,20,000 Fixed Assets 14, 40,000

Net profit 3,60,000 Net worth 15,00,000

Inventory 8,00,000 Debt. 9,00,000

Current Liabilities 6,00,000