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Chapter 5 Accounting Ratios Solutions

Question - 21 : -
Calculate Inventory Turnover Ratio if:
Inventory in the beginning is ₹. 76,250, Inventory at the end is 98,500, Gross Revenue from Operations is ₹. 5, 20,000, Sales Return is ₹. 20,000, and Purchases is ₹. 3, 22,250.

Answer - 21 : -



Question - 22 : - Calculate Inventory Turnover Ratio from the data given below:

 

₹

Inventory in the beginning of the year

10,000

Inventory at the end of the year

5,000

Carriage

2,500

Revenue from Operations

50,000

Purchases

25,000

Answer - 22 : -



Question - 23 : - A trading firm’s average inventory is ₹ 20,000 (cost). If the inventory turnover ratio is 8 times and the firm sells goods at a profit of 20% on sale, ascertain the profit of the firm.

Answer - 23 : -



Let Sale Price be ₹ 100
Then Profit is ₹ 20
Hence, the Cost of Revenue from Operations = ₹ 100 − ₹ 20 = ₹ 80
If the Cost of Revenue from Operations is ₹ 80, then Revenue from Operations = 100

Question - 24 : - You are able to collect the following information about a company for two years:

 

 

2015-16

 

2016-17

Trade receivables on Apr. 01

 ₹.

4,00,000

 ₹

5,00,000

Trade receivables on Mar. 31

 

 

₹

5,60,000

Stock in trade on Mar. 31

₹.

6,00,000

₹

9,00,000

Revenue from operations (at gross profit of 25%)

₹.

3,00,000

₹

 24,00,000

Answer - 24 : -



Question - 25 : -
From the following Balance Sheet and other information, calculate following ratios:
(i) Debt-Equity Ratio (ii) Working Capital Turnover Ratio (iii) Trade Receivables Turnover Ratio

Balance Sheet as at March 31, 2017

Particulars

Note No.

₹.

I. Equity and Liabilities:

1. Shareholders’ funds

a) Share capital

10,00,000

b) Reserves and surplus

9,00,000

2. Non-current Liabilities

Long-term borrowings

12,00,000

3. Current Liabilities

Trade payables

5,00,000

Total

36,00,000

II. Assets

1. Non-current Assets

a) Fixed assets

Tangible assets

18,00,000

2. Current Assets

a) Inventories

4,00,000

b) Trade Receivables

9,00,000

c) Cash and cash equivalents

5,00,000

Total

36,00,000

AdditionalInformation: Revenue from Operations ₹. 18, 00,000

Answer - 25 : -

1. Debt-Equity Ratio
 
Debt = Long Term Borrowings = ₹ 12,00,0000     
Equity = Share Capital + Reserve and Surplus
= 10, 00,000 + 9, 00,000
= ₹ 19, 00,000
2. Working Capital Turnover Ratio
 
Revenue from Operations = ₹ 18, 00,000
Working Capital = Current Assets – Current Liabilities
= 18, 00,000 – 5, 00,000
= ₹ 13, 00,000
3. Trade Receivables Turnover Ratio
 
Net Credit Sales = ₹ 18, 00,000
Average Trade Receivables = ₹ 9, 00,000

Question - 26 : -
From the following information, calculate the following ratios:
i) Quick Ratio
ii) Inventory Turnover Ratio
iii) Return on Investment

 

₹.

Inventory in the beginning

50,000

Inventory at the end

60,000

Revenue from operations

4,00,000

Gross Profit

1,94,000

Cash and Cash Equivalents

40,000

Trade Receivables

1,00,000

Trade Payables

1,90,000

Other Current Liabilities

70,000

Share Capital

2,00,000

Reserves and Surplus

1,40,000

Answer - 26 : -





Question - 27 : - From the following, calculate (a) Debt Equity Ratio (b) Total Assets to Debt Ratio (c) Proprietary Ratio.

 

₹

Equity Share Capital

75,000

Preference Share Capital

25,000

General Reserve

45,000

Balance in the Statement of Profits and Loss

30,000

Debentures

75,000

Trade Payables

40,000

Outstanding Expenses

10,000

 

 

Answer - 27 : -




Question - 28 : - Cost of Revenue from Operations is ₹ 1, 50,000. Operating expenses are ₹ 60,000. Revenue from Operations is ₹ 2, 50,000. Calculate Operating Ratio.

Answer - 28 : -



Question - 29 : -
 Calculate the following ratio on the basis of following information:
(i) Gross Profit Ratio (ii) Current Ratio (iii) Acid Test Ratio (iv) Inventory Turnover Ratio (v) Fixed Assets Turnover Ratio

 

₹.

Gross Profit

50,000

Revenue from Operations

1,00,000

Inventory

15,000

Trade Receivables

27,500

Cash and Cash Equivalents

17,500

Current Liabilities

40,000

Land & Building

50,000

Plant & Machinery

30,000

Furniture

20,000

Answer - 29 : -





Average Inventory = 15,000*



Question - 30 : - From the following information calculate Gross Profit Ratio, Inventory Turnover Ratio and Trade Receivables Turnover Ratio.

 

₹

Revenue from Operations

3,00,000

Cost of Revenue from Operations

2,40,000

Inventory at the end

62,000

Gross Profit

60,000

Inventory in the beginning

58,000

Trade Receivables

32,000

Answer - 30 : -





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