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Accounting Ratios

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Accounting Ratios

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Accountancy COMPILED BY: CA.

AKSHAY BADAYA (+91 9414775218)

ACCOUNTING RATIOS
1. Compute Current Ratio from the following information :
Rs.
Sundry Debtors 60,000
Prepaid Insurance 5,000
Inventory 80,000
Cash and Bank 20,000
Short-term Investments 40,000
Fixed Assets 2,20,000
Sundry Creditors 30,000
Expenses Payable 6,000
Short-term Loans 25,000
Proposed Dividend 14,000
Provision for Tax 20,000
Answer -Current Ratio:-2.158:1
2. Calculate Current Ratio from the following Balance Sheet of Z Ltd. as at 31st March, 2013 and
Comment upon the result :
Particulars Note No. Rs.
I. EQUITY AND LIABILITIES
(1) Shareholder's Fund :
(a) Share Capital 2,00,000
(b) Reserves & Surplus 1,40,000
(2) Non-current Liabilities
Long-term Borrowings 1,60,000
(3) Current Liabilities
(a) Short-term Borrowings 65,000
(b) Trade Payables 25,000
(c) Other-current Liabilities 10,000
Total 6,00,000
II. Assets
(1) Non-current Assets :
(a) Fixed Assets
(i) Tangible Assets 2,7 0,000
(ii) Intangible Assets 40,000
(b) Non-current Investments 80,000
(2) Current Assets :
(a) Inventories 1,00,000
(b) Trade Receivables 1 70,000
(c) Cash and Cash Equivalents 40,000
Total 6,00,000

Note : 1. Trade Receivables : Rs.

Debtors 43,000
Less : Provision for Doubtful Debts 3,000 40,000
Bills Receivables 30,000
70,000
Answer -Current Ratio:-2.1:1
3. Calculate Current Ratio from the following Balance Sheet of Moon Ltd.
Particulars Note No. Rs.

‘Mangal Prabhat’ 39, Shree Ram Colony, Sector 2, Vidyadhar Nagar, Jaipur | Ph.: 0141-2232667 P a g e | 1
Accountancy COMPILED BY: CA. AKSHAY BADAYA (+91 9414775218)
I. EQUITY AND LIABILITIES
(1) Shareholder's Fund :
(a) Share Capital 5,00,000
(b) Reserves & Surplus 1,00,000
(2) Non-current Liabilities
(a) Long-term Borrowings 3,00,000
(b) Other Long-term Liabilities 40,000
(3) Current Liabilities
(a) Short-term Borrowings 1,00,000
(b) Trade Payables 1,60,000
(c) Short-term Provisions 1 50,000
Total 12,50,000
II. ASSETS
(1) Non-current Assets :
(a) Fixed Assets
(i) Tangible Assets 4,75,000
(ii) Intangible Assets 25,000
(b) Non-current Investments 1,00,000
(2) Current Assets :
(a) Current Investments 1,00,000
(b) Inventories 2 2,00,000
(c) Trade Receivables 2,00,000
(d) Cash and Cash Equivalents 1,25,000
(e) Other Current Assets 3 25,000
Total 12,50,000
Additional Information :
(1) Short-term Provisions include Provision for Doubtful Debts Rs. 10,000.
(2) Inventories include Loose Tools worth Rs. 20,000
(3) Other Current Assets includes Prepaid Expenses Rs. 15,000 and Income Receivables Rs.
10,000.
Answer -Current Ratio:-2.07:1
4. A company had Current Assets of Rs. 2,70,000 and Current Liabilities of Rs. 1,20,000. Thereafter, it
purchased goods from Ram for Rs. 30,000. Compute Current Ration after purchase of goods.
Answer -Current Ratio:-2:1
5. Current Ratio of a firm was 1.9:1 and its Current Liabilities were Rs. 1,00,000. Afterwards, it paid Rs.
20,000 to a creditor. Calculate Current Ratio after making payment of creditor.
Answer -Current Ratio:-2.125:1
6. A firm had Current Assets of Rs. 3,50,000. After making a payment of Rs. 50,000 to a Creditor, its
Current Ratio is 2 : 1. Find the size of its Current Liabilities and working Capital after and before making
the payment to creditor.
Answer-Current Liabilities after payment-150000, Before payment-200000, Working Capital before
payment-150000, After Payment-150000
7. The ratio of Current Assets (Rs. 6,00,000) to Current liabilities (Rs. 4,00,000) is 1.5 : 1. The accountant
of the firm is interested in maintaining a Current Ratio of 2 : 1, by paying off a part of the Current
Liabilities. Compute the amount of Current Liabilities that should be paid so that the Current Ratio at
level of 2 : 1 may be maintained.
Answer-Current Liabilities paid off-2,00,000
8. The Current Assets to Current Liabilities of a firm is Rs. 8,00,000 to Rs. 3,00,000. The accountant of the
firm wishes that Current Ratio be 2 : 1 by acquiring, current assets on credit. Compute the amount of
current Assets acquired for this purpose.

‘Mangal Prabhat’ 39, Shree Ram Colony, Sector 2, Vidyadhar Nagar, Jaipur | Ph.: 0141-2232667 P a g e | 2
Accountancy COMPILED BY: CA. AKSHAY BADAYA (+91 9414775218)
Answer-Current Assets be purchased-200000
9. Calculate Current Ratio from the following information:
Particulars Rs. Particulars Rs.
Total Assets 4,00,000 Non-current Liabilities 1,40,000
Fixed Assets (Tangible) 2,00,000 Non-current Investments 80,000
Shareholders' Fund 2,00,000
Answer -Current Ratio:-2:1
10. Form the following compute Current Ratio :
S.No. Particulars Rs. S.No. Particulars Rs.
1. Total Assets 1,00,000 3. Non-current Liabilities 20,000
2. Shareholders Fund 60,000 4. Non-current Assets 50,000
Answer -Current Ratio:-2.5:1
11. If working Capital is Rs. 3,00,000; Trade Payables Rs. 1,40,000; Other Current Liabilities Rs. 1,20,000;
calculate the Current Ratio.
Answer -Current Ratio:-2.15:1
12. Calculate Current Ratio from the following information :
Working Capital Rs. 2,10,000; Total Debts Rs. 4,30,000; Long-term Debts Rs. 2,25,000.
Answer -Current Ratio:-2.02:1
13. The Current Ratio of a company is 2 : 1. State giving reasons which of the following would improve,
reduce or not change the ratio :
(a) Repayment of a Current Liability
(b) Purchase Goods for Cash
(c) Sale of Office Equipment for Rs 4,000 (book value Rs. 5,000)
(d) Sale of Goods Rs. 11,000 (cost Rs. 10,000) on Credit
(e) Payment of Dividend
14. The Current Ratio of a company is 2 : 1. State giving reasons which of the following would improve,
reduce or not change the ratio :
1. Cash Paid to Trade Payables.
2. Sale of Fixed Tangible Assets for Cash.
3. Issue of New Shares for Cash
4. Payment of Final Dividend already declared.
15. If the Current Ratio is 2 : 1, state giving reasons which of the following transactions would (i) improve
(ii) reduce or (iii) not alter the Current Ratio :
(i) B/R drawn
(ii) B/R endorsed to creditors
(iii) B/R dishonoured
(iv) Sale of goods for cash at par
(v) Sale of goods for cash at profit
(vi) Sale of goods on credit at loss
(vii) Sale of asset on credit
(viii) Purchase an asset for cash
(ix) Purchase an asset on credit
(x) B/P given to creditors
(xi) Bank Loan repaid
(xii) Debenture redeemed for cash
(xiii) Issue of debenture against purchase of Fixed Assets
(xiv) Issue of shares for cash
(xv) Sale of Non-current investment

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(xvi) Sale of short-term Investment at Profit
(xvii) Purchase of goods for cash
(xviii) Purchase of goods on credit
(xix) Bought goods from Ram
(xx) Payment of Dividend already declared
16. From the following compute (a) Current Ratio (b) Quick Ratio.
S. No. Particulars Rs. S. No. Particulars Rs.
1. Current Investments 40,000 7. Short-term Provisions 3,000
2. Inventories 5,000 8. Other Current Liabilities 5,000
3. Trade Receivables 2,000 9. Short-term Loans and Advances 4,000
4. Short-term Borrowings 20,000 10. Tangible Fixed Assets 1,00,000
5. Trade Payables 2,500 11. Cash and Cash Equivalents 10,000
6. Prepaid Expenses 2,000 12. Advance Tax 8,000
Answer -Current Ratio:-2.33:1 Quick Ratio-1.84:1
17. Calculate Current Ratio and Quick Ratio or Liquid Ratio from the following information and comment.
Current Assets Rs. Current Liabilities Rs.
Cash 4,000 Sundry Creditors 20,000
Bank 5,000 Bills Payable 10,000
Debtors 32,000 Outstanding Expenses 4,000
Bills Receivable 16,000 Provision for Tax 8,000
Stock 50,000 Proposed Dividend 8,000
Prepaid Expenses 4,000 Provision for Doubtful Debts 1,000
1,11,000 51,000
Answer -Current Ratio:-2.2:1 Quick Ratio-1.12:1
18. Compute Quick Ratio from the following data :
Current Assets Rs. 70,000; Inventory Rs. 12,000; Prepaid Expenses Rs 3,000 and Working
Capital Rs. 20,000
Answer - Quick Ratio-1.1:1
19. Following is the Balance Sheet of X Ltd. as on 31st March, 2012.
Particulars Note No. Rs.
I. EQUITY AND LIABILITIES
(1) Shareholders' Fund
(a) Share Capital 10,00,000
(b) Reserves and Surplus 10,00,000
(2) Non-current Liabilities
Long-term Borrowings 10,00,000
(3) Current Liabilities
Trade Payables 25,00,000
Total 55,00,000
II. ASSETS
(1) Non-current Assets
(a) Fixed Assets - Tangible 20,00,000
(b) Non-current Investments 1,00,000
(2) Current Assets
(a) Inventories 9,00,000
(b) Trade Receivables 24,00,000
(c) Cash and Cash Equivalents 1,00,000
Total 55,00,000
The existing Liquid Ratio stands at 1 : 1. A liability of Rs. 4,00,000 under dispute has to be
paid immediately as per High Court Order.

‘Mangal Prabhat’ 39, Shree Ram Colony, Sector 2, Vidyadhar Nagar, Jaipur | Ph.: 0141-2232667 P a g e | 4
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Show the effect of this order on Liquid Ratio and Current Ratio as on 31 st March, 2012.
(C.B.S.E., Sampler Paper I, 2010-Modified)
20. The Current Assets of a company were Rs. 9,00,000. Its Current Ratio is 3.0 and Liquid Ratio is 1.2.
Calculate the amount of Current Liabilities, Liquid Assets and Inventory.
Answer -Current Liabilities-3,00,000, Liquid Assets-3,60,000, Inventory-5,40,000

21. Current Liabilities of a company are Rs. 1,60,000. Its Liquid Ratio is 1.5 : 1 and Current Ratio is 2.5 : 1.
Calculate Quick Assets and Current Assets.
Answer-Current Assets-4,00,000, Liquid Assets-2,40,000
22. A Business has Current Ratio of 3 : 1 and a Quick Ratio of 1.2 : 1. If the working capital is Rs. 1,80,000,
calculate the total Current Assets and Stock.
Answer-Total Current Assets-2,70,000, Stock-1,62,000
23. X Ltd. has a Liquid Ratio of 7 : 3. If its stock is Rs. 25,000 and its Current Liabilities are Rs. 75,000, find
out the Current Ratio.
Answer -Current Ratio:-2.67:1

24. The Current Ratio of A Ltd., is 4.5 : 1 and Liquid Ratio is 3 : 1. Inventories is Rs. 3,00,000. What are the
Current Liabilities?
Answer-Current Liabilities-2,00,000
25. Om Ltd. has a Current Ratio of 3.5 : 1 and Quick Ratio of 2 : 1. If the excess of Current Assets over
Quick Assets is represented by Stock is Rs. 1,50,000, calculate Current Assets and Current Liabilities.
Answer-Current Liabilities-1,00,000, Current Assets-3,50,000
26. Current Liabilities are Rs. 5,60,000; Current Ratio is 5 : 2 and Quick Ratio is 2 : 1. Find out the value of
Stock.
Answer-2,80,000
27. If working Capital is Rs. 90,000; Current Ratio 2.5 : 1 and Stock is Rs. 80,000, calculate (i) Current
Liabilities, (ii) Current Assets, (iii) Liquid Ratio.
Answer-Current Liabilities-60,000, Liquid Assets-70,000, Liquid Ratio-1.17:1
28. Calculate Current Ratio and Quick Ratio from the following:
Working Capital Rs. 1,20,000; Total Debts Rs. 4,00,000; Long-term Debts Rs. 3,00,000; Inventory Rs.
1,10,000 and Prepaid Expenses Rs. 10,000.
Answer -Current Ratio:-2.2:1 Quick Ratio-1:1
29. If working Capital of a company is Rs. 2,00,000 and Current Assets Rs. 3,40,000, find the Acid Test
Ratio and Current Ratio of the company assuming that Inventory is Rs. 1,50,000, Prepaid Expenses are
10,000 and Advance Tax is Rs. 20,000.
Answer -Current Ratio:-2.43:1 Quick Ratio-1.14:1
30. Compute Current Ratio is Quick Ratio of Alto Ltd., from the following Balance Sheet as at 31st March,
2013 and comment on short-term solvency position of the company.
Particulars Note No. Rs.
I. EQUITY AND LIABILITIES
(1) Shareholders' Fund
(a) Share Capital 3,00,000
(b) Reserves and Surplus 1,50,000
(2) Non-current Liabilities
Long-term Borrowings 10% Debentures 2,00,000
(3) Current Liabilities
(a) Trade Payables 80,000
(b) Other Current Liabilities 1 50,000

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(c) Short-term Provisions 20,000
Total 8,00,000
II. ASSETS
(1) Non-current Assets
(a) Fixed Assets - Tangible 3,70,000
(b) Non-current Investments 1,00,000
(2) Current Assets
(a) Inventories 2 1,10,000
(b) Trade Receivables 1,20,000
(c) Cash and Cash Equivalents 60,000
(d) Other Current Assets 3 40,000
Total 8,00,000
Notes to Accounts
Particulars Rs.
1. Other Current Liabilities
8% Debentures 50,000
2. Inventories
Cost of Material Consumed 80,000
Change in Inventories of Finished Goods & Work in Progress 20,000
Loose Tools 10,000
1,10,000
3. Other Current Assets
Prepaid Expenses 5,000
Advance Tax 20,000
Interest Receivables 15,000
40,000
Answer -Current Ratio:-2.13:1 Quick Ratio-1.3:1
31. The quick ratio of a company is 1 : 1. State giving reasons, (for any four) which of the following would
improve, reduce or not change the ratio?
(i) Purchase of machinery for cash
(ii) Purchase of goods on credit
(iii) Sale of furniture at cost
(iv) Sale of goods at a profit
(v) Redemption of Debentures at a premium
(vi) Cash received from Debtors.
32. If the Liquid Ratio is 1 : 1, find whether the following transactions would (i) improve (ii) reduce (iii) not
later the Liquid Ratio :
(i) Goods sold for cash
(ii) Goods sold on credit
(iii) Purchase of goods for cash
(iv) Purchase of goods on credit
(v) B/R drawn
(vi) B/R endorsed to creditors
(vii) Payment of tax-provision
(viii) Sale of short-term investment at par
(ix) Sale of investment at profit
(x) Purchase of marketable securities on credit
33. Calculate Current Ratio from the following:
Working Capital Rs. 1,92,000; Long-term Debt Rs. 80,000 and Total Debt Rs. 2,00,000.
Ans. 2.6 : 1

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34. Calculate Current Ratio from the following:
Working Capital Rs. 4,80,000; Trade Payables Rs. 2,00,000 and Bank Overdraft Rs. 40,000.
Ans. 3 : 1
35. Calculate Current Ratio from the following:
Working Capital Rs. 4,80,000; Current Assets Rs. 6,00,000; Inventory Rs. 4,00,000 and Trade
Receivables Rs. 1,50,000.
Ans. 5 : 1
36. A firm had current assets of Rs. 4,10,000. It then paid trade payables of Rs. 50,000. After this payment,
the current ratio was 2.4 : 1. Ascertain the amount of Current Liabilities and Working Capital after the
payment.
Ans. Current Liabilities Rs. 1,50,000; Working Capital Rs. 2,10,000.
37. A firm had current assets of Rs. 7,20,000. It then purchased goods for Rs. 30,000 on credit. After this
purchase, the current ratio was 3 : 1. Ascertain the amount of Current Liabilities and Working Capital
after the purchase.
Ans. Current Liabilities Rs. 2,50,000; Working Capital Rs. 5,00,000.
38. Current Ratio 2 : 1, Quick Ratio 1.5 : 1, Current Liabilities Rs. 1,60,000. Calculate Current Assets, Quick
Assets and Inventory.
Ans. Rs. 3,20,000, Rs. 2,40,000, Rs. 80,000.
39. Current Ratio 2.5 : 1, Quick Ratio 0.95 : 1, Current Assets Rs. 17,00,000. Calculate Current Liabilities,
Quick Assets band Inventory.
Ans. Rs. 6,80,000, Rs. 6,46,000, Rs. 10,54,000.
40. Working Capital Rs. 5,40,000; Current Ratio 2.8 : 1; Inventory Rs. 3,30,000. Calculate Current Assets,
Current Liabilities and Quick Ratio.
Ans. Rs. 8,40,000; Rs. 3,00,000; 1.7 : 1.
41. A business has a Current Ratio of 4 : 1 and a Quick Ratio of 1.2 : 1. If the Working Capital is Rs.
1,80,000, calculate the total Current Assets and Inventory.
Ans. Current Assets Rs. 2,40,000; Inventory Rs. 1,68,000.
42. Current Ratio 2.4; Current Assets Rs. 1,81,10,400; Inventories Rs. 79,23,300. Calculate the Liquid Ratio.
Ans. Liquid Ratio 1.35
43. Quick Ratio 1.5; Current Assets Rs. 1,00,000; Current Liabilities Rs. 40,000. Calculate the value of
Inventory.
Ans. Rs. 40,000
44. A Company’s inventory is Rs. 2,00,000. Total liquid assets are Rs. 8,00,000 and quick ratio is 2 : 1.
Calculate the current ratio.
Ans. Current Ratio 2.5 : 1
45. A firm has Current Ratio of 4.5 : 1 and Quick Ratio of 3 : 1. If its inventory is Rs. 72,000, find out its
total current assets and total current liabilities.
Ans. Current Assets Rs., 2,16,000; Current Liabilities Rs. 48,000.
46. Current Assets Rs. 85,000; Inventory Rs. 22,000; Prepaid Expenses Rs. 3,000; Working Capital Rs.
45,000. Calculate Quick Ratio.
Ans. Quick Ratio 1.5 : 1
Hints:- (i) Quick Assets = Current Assets – Inventory – Prepaid Expenses
(ii) Current Liabilities = Current Assets – Working Capital
47. Quick Assets Rs. 90,000; Inventory Rs. 1,08,000; Prepaid Expenses Rs., 2,000; Working Capital Rs.
1,50,000. Calculate Current Ratio.
Ans., Current Ratio 4 :1.
Hints:- (i) Current Assets = Quick Assets + Prepaid Exp.

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(ii) Current Liabilities = Current Assets – Working Capital
48. Work ion Capital Rs. 4,80,000; Total Debt Rs. 16,00,000; Long Term Debt Rs. 10,00,000; Inventory Rs.
3,40,000; Prepaid Insurance Rs, 20,000. Calculate liquid ratio
Ans. 1.2
49. The ratio of Current Assets (Rs. 32,00,000) to Current liabilities ( Rs. 20,00,000) is 1.6 : 1. The
accountant o f the firm is interested in maintaining a Current Ratio of 2 : 1, by paying off a part of the
Current Liabilities. Compute the amount of the Current Liabilities that should be paid, so that the
Current Ratio at the level 2 : 1 may be maintained.
Ans. Current liabilities to the extent of Rs. 8,00,000 should be paid to achieve the Current Ratio at
the level of 2 : 1.
50. The ratio of Current Assets (Rs. 5,00,000) to Current Liabilities 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
required to suggest him the amount of Current Assets which must be acquired for this purpose.
Ans. Current Assets to the extent of Rs. 1,00,000 should be acquired on credit to maintain a Current
Ratio of 2 : 1.
51. Compute Debt-Equity Ratio of Delta Ltd. from the following information :
Particulars Rs. Particulars Rs.
Share Capital 3,00,000 Trade Payables 25,000
10% Debentures 2,00,000 Short-term Borrowings 1,00,000
Public Deposits 1,00,000 Long-term Provisions 60,000
Balance in Statement of Capital Reserves 40,000
Profit and loss 1,20,000
Answer: Debt-Equity Ratio-0.78:1
52. From the followings information compute Debt-Equity Ratio :
Particulars Note No. Rs.
1. Shareholders' Fund
(a) Share Capital 5,00,000
(b) Reserves and Surplus 2,50,000
7,50,000
2. Non-current Liabilities
(a) Long-term Borrowings 10,00,000
(b) Long-term Provisions 80,000
10,80,000
3. Current Liabilities 5,00,000
Answer: Debt-Equity Ratio-1.44:1
53. Calculate Debt-Equity Ratio from the following information :-
(i) Total Assets Rs. 3,50,000
(ii) Total Debts Rs. 2,50,000
(iii) Current Liabilities Rs. 80,000
Answer: Debt-Equity Ratio-1.7:1

54. Compute Debt-Equity Ratio of Star Ltd., from the following Balance Sheet as on 31st March, 2013 :
Particulars Note No. Rs.
I. EQUITY AND LIABILITIES
(1) Shareholders' Fund
(a) Share Capital 10,00,000
(b) Reserve and Surplus 1,50,000
(2) Non-current Liabilities
(a) Long-term Borrowings 10,00,000
(b) Long-term Provisions 2,30,000

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(3) Current Liabilities
Trade Payables 4,20,000
Total 25,00,000
II. ASSETS
(1) Non-current Assets
(a) Fixed Assets - Tangible 16,00,000
(b) Non-current Investments 1,00,000
(2) Current Assets
(a) Inventories 3,00,000
(b) Trade Receivables 3,50,000
(c) Cash and Cash Equivalents 1,00,000
(d) Other Current Assets 1 50,000
Total 25,00,000
Note to Accounts
Particulars Rs.
1. Other Current Assets
Prepaid Expenses 40,000
Accrued Income 10,000
50,000
Answer: Debt-Equity Ratio-1.06:1
55. From the followings Balance Sheet of Sonali Ltd., as on 31st march, 2012, compute Debt-Equity Ratio.
Particulars Note No. Rs.
I. EQUITY AND LIABILITIES
(1) Shareholders' Fund
(a) Share Capital 6,00,000
(b) Reserve and Surplus 2,00,000
(2) Non-current Liabilities
(a) Long-term Borrowings 1 10,00,000
(b) Long-term Provisions 1,50,000
(3) Current Liabilities
(a) Trade Payables 2,50,000
(b) Short-term Provisions 1,00,000
Total 23,00,000
II. ASSETS
(1) Non-current Assets
(a) Fixed Assets - Tangible 13,00,000
(b) Other Non-current Investments 2,60,000
(c) Long-term Loans and Advances 40,000
(2) Current Assets
(a) Inventories 2,50,000
(b) Trade Receivables 2,30,000
(c) Cash and Cash Equivalents 1,15,000
(d) Other Current Assets 2 1,05,000
Total 23,00,000
Notes to Accounts
Particulars Rs.
1. Long-term Borrowings
10% Debentures of Rs. 100 each 8,00,000
Loan from Bank - Secured 2,00,000
10,00,000
2. Other Current Assets
Prepaid Expenses 35,000

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Advance Tax 70,000
1,05,000
Answer: Debt-Equity Ratio-1.44:1
56. From the following Balance Sheet of X Ltd. calculate the Debt-Equity Ratio.
Balance Sheet of X Ltd.
as on 31st March, 2012
Particulars Note No. Rs.
I. EQUITY AND LIABILITIES
(1) Shareholders Fund
(a) Share Capital 9,00,000
(b) Reserves and Surplus 4,00,000
(2) Non-current Liabilities
(a) Long-term Borrowings 15,00,000
(b) Long-term Provisions 50,000
(3) Current Liabilities
(a) Trade Payables 2,50,000
(b) Other Current Liabilities 1 1,00,000
(c) Short-term Provisions 1,50,000
Total 33,50,000
II. ASSETS
(1) Non-current Assets
Fixed Assets
(i) Tangible 22,70,000
(ii) Intangible 40,000
(2) Current Assets
(a) Inventories 3,50,000
(b) Trade Receivables 3,20,000
(c) Cash and Cash Equivalents 3,50,000
(d) Other Current Assets 2 20,000
Total 33,50,000
Notes to Accounts
Particulars Rs.
1. Other Current Liabilities
Current Maturity of Long-term Borrowings 1,00,000
2. Other Current Assets
Prepaid Expenses 10,000
Income Receivable 10,000
20,000
Answer: Debt-Equity Ratio-1.19:1
57. Assuming that the Debt-Equity ratio is 2. State giving reasons whether this ratio would increase,
decrease or remain unchanged in the following cases (Any Four)
(a) Purchase of fixed asset on a credit of 2 months.
(b) Purchase of fixed asset on a long-term deferred payment basis.
(c) Issue of new shares for cash.
(d) Issue of Bonus shares.
(e) Sale of fixed asset at a loss of Rs. 3,000.
58. If Debt-Equity Ratio is 2 : 1, state giving reason whether the Ratio will increase or decrease or not alter
in the following cases :
(i) Debenture reduced by Rs. 50,000
(ii) Purchased plant for Rs. 1,00,000 by issuing debentures.

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(iii) Purchased furniture for Rs. 40,000 on 2 months credit.
(iv) Sale of Assets for Rs. 30,000
(v) Issue of 9% Debentures for Rs. 1,00,000
(vi) Issue of Equity Shares Rs. 2,00,000
(vii) Payment of Proposed Dividend Rs. 20,000
(viii) Declaration of Final Dividend Rs. 30,000
(ix) Goods purchased on credit Rs. 20,000
(x) Issue of Bonus Shares Rs. 50,000
(xi) Conversion of Debentures into Equity Shares.
(xii) Sale of fixed assets at a profit.
59. Calculate Total Assets to Debt Ratio from the following information :
Total Debts Rs. 12,00,000, Shareholders' Fund Rs. 6,00,000 and Current Liabilities Rs.
4,00,000.
Answer-Total assets to debt ratio-2.25:1
60. Compute Total Assets to Debt Ratio from the following information of X Ltd. :
(i) Non-current Assets Rs. 8,90,000
(ii) Current Assets Rs. 4,10,000
(iii) Non-current Liabilities Rs. 6,50,000
Answer-Total assets to debt ratio-2:1
61. From the following Balance Sheet of Exe Ltd., calculate Proprietary Ratio and Total Assets to Debt
Ratio :
Balance Sheet of Exe Ltd.
as on 31st March, 2013
Particulars Note No. Rs.
I. EQUITY AND LIABILITIES
(1) Shareholders' Fund
(a) Share Capital 4,00,000
(b) Reserves and Surplus (80,000)
(2) Non-current Liabilities
Long-term Borrowings 5,00,000
(3) Current Liabilities
(a) Trade Payables 1,60,000
(b) Other Current Liabilities 70,000
(c) Short-term Provisions 50,000
Total 11,00,000
II. ASSETS
(1) Non-current Assets
(a) Fixed Assets
(i) Tangible 4,00,000
(ii) Intangible 40,000
(b) Non-current Investments 1,00,000
(2) Current Assets
(a) Investments 2,00,000
(b) Trade Receivables 2,40,000
(c) Cash and Cash Equivalents 1,00,000
(d) Other Current Assets 1 20,000
Total 11,00,000
Notes to Accounts
Particulars Rs.
1. Other Current Assets

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Prepaid Expenses 10,000
Advance Tax 10,000
20,000
Answer-Proprietary Ratio-0.29:1, Total assets to debt ratio-2.2:1
62. From the following compute :
(a) Debt to Equity Ratio
(b) Total Assets to Debt Ratio
(c) Proprietary Ratio
S.No. Particulars Amount (Rs.)
1. Long-term Borrowing 1,00,000
2. Long-term Provisions 50,000
3. Current Liabilities 25,000
4. Non-current Assets 1,80,000
5. Current Assets 45,000
Answer- Debt-Equity Ratio-3:1, Proprietary Ratio-0.22:1, Total assets to debt ratio-1.5:1

63. From the following Balance Sheet of Rahul Ltd., as on 31st March, 2013, Compute (1) Proprietary Ratio
(2) Total Assets to Debt Ratio and (3) Debt-Equity Ratio and comment on the basis of ratios.
Particulars Note No. Rs.
I. EQUITY AND LIABILITIES
(1) Shareholders' Fund
(a) Share Capital 7,00,000
(b) Reserves and Surplus 2,50,000
(2) Non-current Liabilities
(a) Long-term Borrowings 4,60,000
(b) Long-term Provisions 40,000
(3) Current Liabilities
(a) Trade Payables 2,20,000
(b) Other Current Liabilities 80,000
(c) Short-term Provisions 1,00,000
Total 18,50,000
II. ASSETS
(1) Non-current Assets
(a) Fixed Assets - Tangible 7,00,000
- Intangible 80,000
(b) Non-current Investments 2,70,000
(2) Current Assets
(a) Inventories 3,00,000
(b) Trade Receivables 3,60,000
(c) Cash and Cash Equivalents 1,00,000
(d) Other Current Assets 1 40,000
Total 18,50,000
Note to Account
Particulars Rs.
1. Other Current Assets
Rent Receivable 10,000
Prepaid Expenses 30,000
40,000
Answer- Debt-Equity Ratio-0.53:1, Proprietary Ratio-0.51:1, Total assets to debt ratio-:3.7:1
64. Compute (i) Debt-Equity Ratio, (ii) Total Assets to Debt Ratio and (iii) Proprietary Ratio from the
following data :

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Rs.
Total Debts 5,50,000
Total Assets 10,00,000
Current Liabilities 2,00,000
Answer- Debt-Equity Ratio-0.78:1, Proprietary Ratio-0.45:1, Total assets to debt ratio-2.86:1
65. Akshara Ltd., has 8% Debentures for Rs. 5,00,000. Its Profit before Interest and Tax is Rs. 2,00,000.
Compute interest coverage ratio.
Answer-Interest Coverage Ratio-5 tie
66. Compute Interest coverage ratio from the following details :
Rs.
(i) 10% Debentures 4,00,000
(ii) 8% Loan from IDBI 3,00,000
(iii) 9% Public Deposits 2,00,000
(iv) Net Profit after 50% Tax 2,05,000
Answer-Interest Coverage Ratio-6 times
67. Calculate the Debt Equity Ratio from the following:-
Rs.
Equity Share Capital 3,00,000
Preference Share Capital 50,000
Reserves 1,60,000
Profit & Loss Balance (Accumulated Loss) (50,000)
Long-term Borrowings 2,00,000
Provision for Employee Benefits 60,000
Ans. Debt Equity Ratio = = = 0.57 : 1
Hints: (i) Shareholder’s Funds = Equity Share Capital + Preference Share Capital + Reserves – P & L
(ii) Provision for Employee Benefits will be treated as Long terms
Provision.
68. From the following, ascertain Debt-Equity Ratio:
Rs.
Share Capital 6,00,000
Capital Reserve 3,20,000
General Reserve 60,000
Profit & Loss Balance 1,40,000
8% Debentures 5,00,000
10% Long term Loan 3,40,000
Long term Provision 1,12,000
Current Liabilities 2,20,000
Current Assets 3,10,000
Ans. Debt Equity Ratio = 1.4 : 1
Hint : Shareholder’s Funds = Non Current Assets + Working Capital – Non Current Liabilities = Rs.
12,50,000
69. Calculate Debt Equity Ratio from the following:
Total Assets Rs. 2,30,000; Total Debt Rs. 1,50,000; Current Liabilities Rs. 30,000.
Ans. Debt Equity Ratio = = 1.5 : 1
70. the debt-equity ratio of a company is 1 : 2. Which of the following suggestions would increase,
decrease or not change it?
(i) Issue of Equity Shares
(ii) Cash Received from Trade Receivables
(iii) Sale of Goods on Cash Basis

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(iv) Repayment of Long term Borrowings
(v) Purchased Goods on Credit
Ans. (i) Decrease, (ii) No Change, (ii) No Change, (iv) Decrease, (v) No Change.
71. Assuming that the debt-equity ratio is 2 : 1, state giving reasons, which of the following transactions
would (i) increase (ii) decrease (iii) not alter the debt-equity ratio :-
(i) Issue of Preference Shares
(ii) Buy – back of its own shares by a Company
(iii) Issue of debentures
(iv) Repayment of Bank Loan
(v) Sale of a fixed asset at par
(vi) Sale of a fixed asset at profit
(vii) Sale of a fixed asset at loss
(viii) Purchase of a fixed asset on a credit on 3 months
(ix) Purchase of a fixed asset on long-term deferred payment basis
Ans. (i) Decrease (ii) Increase (iii) Increase (iv) Decrease (v) Not alter (vi) Decrease (vii) increase (vii) Not
alter increase.
72. Compute Total Assets to Debt Ratio from the following information:
Rs. Rs.
Total Assets 35,00,000 Bill Payables 20,000
Total Debts 32,00,000 Short-term Borrowings 1,00,000
Creditors 2,50,000 Outstanding Expenses 30,000
Ans. Total Assets to Debt Ratio = 1.25 : 1
73. Calculate Total Assets to Debt Ratio from the following information:
Rs. Rs.
Shareholder’s Funds 32,00,000 Total Debts 24,00,000
Reserve and Surplus 12,00,000 Trade Payables 5,60,000
Bank Overdraft 40,000
Ans. 3.11 : 1
74. From the following information, calculate Total Assets to Debt Ratio:
Rs. Rs.
8% Debentures 30,00,000 Share Capital 20,00,000
Loan from Bank 10,00,000 Reserve and Surplus 5,00,000
Short term Borrowings 8,60,000 Surplus, i.e., Balance in
Statement of Profit & Loss 2,20,000
Ans. 1.84 : 1
Hint: surplus i.e. , Balance in Statement of Profit & Loss will be ignored since it is already included in
Reserve and Surplus.
75. Total Debt Rs. 40,00,000; Share Capital Rs. 15,00,000; Reserve and Surplus Rs. 8,00,000; Current
Liabilities Rs. 5,00,000; Working Capital Rs. 7,00,000. Calculate Total Assets to Debt Ratio.
Ans. 1.8 : 1
76. Calculate Total Assets to Debt Ratio from the following:
Rs. Rs.
Capital Employed 60,00,000 Trade Payable 8,00,000
Share Capital 20,00,000 Outstanding Expenses 40,000
Reserve and Surplus 16,00,000
Ans. 2.85 : 1
77. Following particulars are extracted from the books of Bharat Rubber Ltd.:

Rs.

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Share Capital 3,20,000
General Reserve 1,00,000
Profit & Loss Balance 48,000
9% Debentures 1,20,000
Current Liabilities 3,04,000
Non Current Assets 3,60,000
Inventory 1,76,000
Trade Receivables 3,28,000
Cash & Cash Equivalents 28,000
You are required to work out the following ratio :-
(i) Debt- Equity Ratio; (ii) Total Assets to Debt Ratio; (iii) Proprietary Ratio; (iv) Quick Ratio.
Ans. (i) Debt-Equity Ratio = = 0.26 : 1
(ii) Total Assets to Debt Ratio = = 7.43 : 1

(iii) Proprietary Ratio = X 100 = 52.47%

(iv) Quick Ratio = 1.17 : 1.
78. Calculate (i) Debt Equity Ratio, (ii) Proprietary Ratio and (iii) Total assets to Debt Ratio from the
following information:

Rs.
5% Debentures 15,00,000
Loan from IDBI 10,00,000
Trade Payables 11,00,000
Equity Share Capital 28,00,000
Reserves 12,00,000
Profit & Loss Balance 4,00,000
Goodwill 6,00,000
Other Non Current Assets 46,00,000
Current Assets 28,00,000
Ans. (i) 0.57 : 1; (ii) 55%; (iii) 3.2 : 1
79. Following particulars are giving to you :
Rs.
Long term Borrowings 7,00,000
Long term Provisions 2,25,000
Non Current Assets 12,00,000
Current Assets 5,40,000
Current Liabilities 1,40,000
Calculate (i) Debt Equity Ratio, (ii) Total Assets to Debt Ratio and (iii) Proprietary Ratio.
Ans. (i) 1.37 : 1, (ii) 1.88 : 1, (iii) 38.79%
80. Calculate the value of Current Assets of X Ltd. from the following information:
Rs.
Equity Share Capital 25,00,000
6% Preference Share Capital 5,00,000
General Reserve 8,00,000
Profit & Loss Balance (2,00,000)
Fixed Assets 30,00,000
Proprietary Ratio 0.75 : 1
Ans. Current Assets Rs. 18,00,000
81. From the following information, calculate interest coverage ratio and give your comments also:
Rs.

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Net Profit after Interest and Tax 1,20,000
Rate of Income Tax 50%
15% Debentures 1,00,000
12% Mortgage Loan 1,00,000
Ans. Interest Coverage Ratio = 9.89 times.
Comments: An interest coverage ratio of 6 to 7 times is considered appropriate. As the actual interest
coverage ratio of this company is nearly 10 times, it means that the company will be able to pay the
interest on long-term loans regularly.
82. The following particulars are given to you:
Rs.
Share Capital 1,00,000
Reserve and Surplus 1,50,000
Current Liabilities 4,00,000
Current Assets 5,50,000
Tangible Fixed Assets 7,00,000
Loans@ 10% 4,00,000
12% Debentures 2,00,000
Net Profit for the year after interest and tax was Rs. 96,000. Rate of Income Tax was 50%.
Calculate (i) Debt Equity Ratio; (i) Proprietary Ratio; and (ii) Interest Coverage Ratio.
Also give your comments.
Ans.
(i) Debt-Equity Ratio = = 2.4 : 1
(ii) Proprietary Ratio = X 100 = 20%
(iii) Interest Coverage Ratio = 4 times
Comments: (i) Debt – Equity Ratio of the Company is not satisfactory because it is more than the
acceptable norms of 2 : 1. It shows risky financial position from the long-term point of view.
(ii) Proprietary Ratio is only 20% which Means that the long-term financial position of the
Company is not satisfactory because only 205 of the total assets on the company are
funded by equity.
(iii) Normally acceptable interest-coverage ratio is 6 or 7 times, whereas the actual ratio for
this company is 4. It means that the company may face difficulty in paying the interest on
long-term loans regularly in case of fall of profits.
83. Compute Inventory Turnover Ratio from the following information :
Rs.
Cost of Revenue from Operations (Cost of Goods Sold) 6,00,000
Inventories at the beginning of the year 1,20,000
Inventories at the end of the year 1,60,000
Answer-Inventory Turnover ratio-4.28 times
84. Calculate Inventory Turnover Ratio from the following Statement of Profit and Loss of X Ltd. :
Statement of Profit and Loss
for the year ending 31st March, 2013
Particulars Note No. Rs.
I. Revenue from Operations (Sales) 9,00,000
II. Other Income 50,000
III. Total Revenue (I + II) 9,50,000
IV. Expenses
(a) Purchase of Stock-in-Trade 5,00,000
(b) Change in Inventories of Stock-in-Trade 1 30,000
(c) Employees Benefit Expenses 1,20,000

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(d) Other Expenses 50,000
Total Expenses 7,00,000
V. Profit before Tax (III-IV) 2,50,000
Notes to Accounts
Particulars Rs.
1. Change in Inventories of Stock-in-Trade
Opening Inventory 1,00,000
Less : Closing Inventory 70,000
30,000
2. Other Expenses
Carriage Inwards 10,000
Carriage Outwards 5,000
Freight 15,000
General Expenses 20,000
50,000
Note : Change in Inventory refers to (Opening Stock - Closing Stock)
Answer-Inventory Turnover ratio-6.53 times
85. From the following Statement of Profit and Loss of Gopal Ghee Ltd., for the year ended 31st March,
2013. Compute Inventory Turnover Ratio and Average Holding Period :
Particulars Note No. Rs.
I. Revenue from Operations (Sales) 18,00,000
II. Other Income 60,000
III. Total Revenue (I + II) 18,60,000
IV. Expenses
a) Cost of Material Consumed 1 8,80,000
b) Change in Inventories of Finished Goods and Works-in Progress 2 (20,000)
c) Employees Benefit Expenses 3 2,60,000
d) Depreciation 80,000
e) Other Expenses 4 1,50,000
Total Expenses 13,50,000
V. Profit before Tax (III-IV) 5,10,000
Notes to Accounts
Particulars Rs.
1. Cost of Material Consumed
Opening Raw Material 2,10,000
Add : Purchases 8,00,000
10,10,000
Less : Closing Inventory of Raw Material 1,30,000
8,80,000
2. Change in Inventories of Finished Goods & Work-in-Progress
Opening Inventory 1,00,000
Less : Closing Inventory 1,20,000
(20,000)
3. Employees Benefit Expenses
Wages 1,50,000
Salaries 70,000
P.F. Contribution of which Rs. 30,000 relate to Workers (Factory) 40,000
2,60,000
4. Other Expenses
Carriage 10,000
Fuel ad Power 60,000
Freight 15,000

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General Expenses 65,000
1,50,000
Answer-Inventory Turnover ratio-4.02 times, Average Holding Period-91days
86. Compute Inventory Turnover Ratio from the following information :
Rs.
Cost of Revenue from Operations (i.e.Cost of Goods Sold) 4,00,000
Purchase of Stock-in-Trade 4,20,000
Closing Inventory of Stock-in-Trade 90,000
Answer-Inventory Turnover ratio-5 times
87. Calculate Inventory Turnover Ratio from the following data :
Revenue from Operations (Sales) Rs. 5,00,000; Gross Profit = 20% Purchases Rs. 3,80,000;
Closing Inventory Rs. 40,000.
Answer-Inventory Turnover ratio-8 times
88. Calculate Inventory Turnover Ratio from the following information :
Sales Rs. 5,00,000; Gross Loss 20%; Operation Inventory Rs. 40,000; Purchases Rs. 6,10,000.
Answer-Inventory Turnover ratio-13.3 times
89. From the given information, calculate the Inventory Turnover Ratio :
Revenue from Operations Rs. 4,00,000; G.P. 25%; Opening Inventory was 1/4 th of the closing
Inventory. Closing Inventory was 20% of Revenue from Operations.
Answer-Inventory Turnover ratio-6 times

90. From the following information, calculate the Inventory Turnover Ratio :
Revenue from Operations Rs. 2,00,000; G.P. 25% on Cost; Opening Inventory was 1/3 of the
value of Closing Inventory; Closing Inventory was 30% of Revenue from Operation.
Answer-Inventory Turnover ratio-4 times

91. Cost of Revenue from Operations = Rs. 3,00,000

Inventory Turnover Ratio = 6 Times
Find out the value of Opening Inventory, if opening inventory is Rs. 10,000 less than the
closing inventory.
Answer-Opening Inventory-45000, Closing Inventory-55000
92. Rs. 2,40,000 is the Cost of Goods Sold; Inventory Turnover = 8 times; Stock at beginning is 1.5 times
more than the Stock at the end. Calculate value of Opening and Closing Inventory.
Answer-Opening Inventory-42858, Closing Inventory-17,143

93. You are given the following information :

Cash Sales Rs. 1,00,000
Credit Sales Rs. 5,00,000
Stock Turnover Ratio = 4 times
Gross Profit = 20%
Compute the value of Opening and Closing Stock in the following cases :
(i) Opening Stock is Rs. 10,000 more than the Closing Stock.
(ii) Closing stock is twice the Opening Stock.
(iii) Opening stock is 2/3 of Closing Stock.
Answer-Opening Inventory-96,000, Closing Inventory-1,44,000
94. Calculate (i) Stock Turnover Ratio, (ii) Average Holding Period, (iii) Purchase from the following
information:
Sales Rs. 3,20,000; Gross Profit 25% on Sales;
Closing stock was Rs. 4,000 more than the Opening Stock which is Rs. 28,000.

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Answer:-Inventory Turnover Ratio-8 times, Average Holding Period 46 days, Purchases-2,44,000
95. Calculate the value of opening and closing stock from the following information :
Gross Sales Rs. 2,25,000, Sales Return Rs. 25,000, Gross Profit 25% above cost. Opening
Stock is Rs. 5,000 more than the Closing Stock and Stock Turnover is 8 times.
Answer-Opening Inventory-22,500, Closing Inventory-17,500
96. Calculate Inventory Turnover Ratio from the following information :
Opening Inventory Rs. 30,000, Purchase of Goods Rs. 2,30,000 and closing Inventory Rs.
60,000.
State giving reason whether the following transactions would (i) increase (ii) decrease or (iii) not
alter the Inventory Turnover Ratio :
(i) Goods Costing Rs. 20,000 Sold for Rs. 30,000.
(ii) Purchase of Goods for Rs. 10,000.
(iii) Goods Costing Rs. 20,000 (Sales Price Rs. 30,000) were distributed as free samples.
(iv) Closing Inventory has increased by Rs. 20,000.
Answer-Inventory Turnover Ratio-4.44 times
97. Determine the amount of Revenue from Operations (i.e. Sales) from the following information :
Inventory Turnover Ratio = 5 Times
Average Inventory = Rs. 70,000
Gross Profit (i) 20% on Sales (ii) 20% above Cost.
Answer-Revenue from operations-(i) 4,37,500, (ii) 4,20,000
98. Calculate Debtors Turnover Ratio from the following information :
Total Revenue from Operations during year Rs. 2,20,000
Cash Revenue from Operations Rs. 20,000
Debtors in the beginning Rs. 30,000
Debtors at the end Rs. 50,000
Answer-Debtors Turnover Ratio-5 times
99. Calculate Debtors or Trade Receivables Turnover Ratio and Average Collection Period from the
following particulars as on 31st March, 2013 assuming 365 working days in a year :
Particulars Rs. Particulars Rs.
Total Gross Revenue from Operations 10,00,000 Debtors 31.03.2012 50,000
Cash Revenue from Operations 1,50,000 Debtors 31.03.2013 60,000
Return of Revenue from Operations 10,000 Bills Receivable 31.03.2012 10,000
Provision for Doubtful Debts 2012 2,000 Bills Receivable 20,000
Provision for Doubtful Debts 2013 3,000
Answer-Debtors Turnover Ratio-12 times, Average Collection Period-31days
100. Compute Debtors or Trader Receivables Turnover Ratio from the following information :
Total Sales Rs. 5,20,000
Cash Sales is 60% of Credit Sales
Closing Debtors Rs. 80,000
Opening Debtors are ¾ of Closing Debtors

Answer-Debtors Turnover Ratio-4.64 times

101. Calculate Debtors or Trade Receivables Turnover Ratio from the following information :
Opening Debtors Rs. 25,000; Cash Received from Debtors Rs. 2,30,000; Sales Return Rs. 5,000;
Closing Debtors Rs. 35,000; Provision for Doubtful debts at eth end Rs. 1,000.
Answer-Debtors Turnover Ratio-8.2 times
102. Calculate the amount of Opening Debtors and Closing Debtors from the following figures :
Debtors Turnover Ratio = 4 times

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Cost of Goods Sold (Cost of Revenue from Operations) = Rs. 6,40,000
Gross Profit Ratio 20%
Closing Debtors were Rs. 20,000 more than at the beginning.
Cash Sale being 33 % of Credit Sales.
Answer-Opening Debtors-1,40,000, Closing Debtors-1,60,000
103. Calculate Debtors Turnover Ratio from the following information :
Cost of Revenue from Operations Rs. 4,00,000
Gross Profit on Cost 25%
Cash Revenue from Operations 20% of Total Revenue
from Operations
Opening Trade Receivables Rs. 70,000
Closing Trade Receivables Rs. 90,000
Answer-Debtors Turnover Ratio- 5 Times
104. If the Debtors Turnover Ratio is 9 times and Revenue from Operations (sales) is 6,00,000. Cash
revenue from operations is 10%. Calculate Opening and Closing debtors in the following cases:
Case I: Opening Debtors are Rs.10,000 more than the closing debtors.
Case II: Closing Debtors are 1.5 times of Opening Debtors.
Case III: Closing Debtors are 1.5 times more than the Opening Debtors.
Case IV: Opening Debtors=Rs. 50,000
Answer-Case I-Opening Debtors-65,000, Closing Debtors-55,000
Case II-Opening Debtors-48,000, Closing Debtors-72,000
Case III-Opening Debtors-34,286, Closing Debtors-85,715
Case IV-Closing Debtors-70,000
105. Compute Trade Receivables Turnover Ratio from the Following information:
Total Revenue from Operations Rs. 4,75,000
Cash Revenue from Operations 75,000
Trade Receivables 1-1-2012 Rs. 60,000
Trade Receivables 31-12-2012 Rs. 1,00,000
Also State giving reason whether the following transactions would increase, decrease or not alter the
Trade Receivable Turnover Ratio:
(i) Credit Sales Rs.40,000
(ii) Cash collected from Debtors Rs.20,000
(iii) Goods sold to Ram for cash Rs.10,000
Answer-Debtors Turnover Ratio- 5 Times
106. Compute Creditors Turnover Ratio and Average Payment Period from the following information:
Total Purchases-Rs.5,30,000
Cash Purchases-Rs.60,000
Purchases Return-Rs.10,000
Creditors: Bills Payable:
Opening-Rs. 80,000 Opening-Rs.10,000
Closing –Rs.90,000 Closing-Rs.20,000
Answer-Creditors Turnover Ratio-4.6 times, Average Payment Period-80 days
107. Compute Creditors Turnover Ratio and Average Payment Period from the following information:
Total Purchases Rs. 6,00,000
Cash Purchases are 25% of Credit Purchases
Closing Creditors Rs. 90,000
Opening Creditors are 2/3 of Closing Creditors
Answer-Creditors Turnover Ratio-6.4 times, Average Payment Period-57 days
108. Calculate Creditors Turnover Ratio from the following information.

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Particulars Rs.
Opening Creditors 22,500
Cash paid to creditors 2,10,000
Purchase Return 3,000
Closing Creditors 28,000
Discount received 1,500
Answer-Creditors Turnover Ratio-8.71 times
109. If Creditors Turnover Ratio is 8 times, Purchases is Rs.5,40,000 and Cash Purchases are 25% of Credit
Purchases, compute opening and closing creditors in the following cases:
(i) Opening Creditors are Rs.10,000 less than the Closing Creditors.
(ii) Closing Creditors are 1.5 times of Opening Creditors.
(iii) Closing Creditors are 1.2 times more than the Opening Creditors.
Answer-Case I-Opening Creditors 49,000, Closing Creditors 59,000
Case II- Opening Creditors 43,200, Closing Creditors 64,800
Case III- Opening Creditors 33,750, Closing Creditors 74,250
110. Calculate Debtors Turnover Ratio, Creditors Turnover Ratio, Average Collection Period and Average
Payment Period in months from the following:
Particulars Rs. Particulars Rs.
Revenue from Operations 5,20,000 Debtors 60,000
Return of Revenue from Operations 20,000 Creditors 50,000
Purchases 3,00,000 Bills Payable 25,000
Bills Receivable 40,000 Provision for Doubtful Debt 1,500
Answer-Debtors Turnover Ratio-5 times, Average Collection Period-2.4 months, Creditors
Turnover Period-4 times, Average Payment Period-3 months.
111. Compute Working Capital Turnover Ratio from the following data:
Revenue from Operations (Sales) 18,80,000
Revenue from Operations Return (Sales Return) 20,000
Current Assets 5,40,000
Current Liabilities 2,30,000
Answer-Working Capital Turnover Ratio-6 times
112. Compute Working Capital Turnover Ratio from the following information:
Cash Revenue from Operations Rs.1,30,000; Credit Revenue from Operations Rs.3,80,000;
Revenue from Operations Return Rs.10,000; Liquid Assets Rs.1,40,000; Current Liabilities
Rs.1,05,000 and Inventory Rs.90,000.
Answer-Working Capital Turnover Ratio-4 times
113. Compute Working Capital Turnover Ratio from the following data:
Revenue from Operations (Sales) 12,00,000
Current Assets 5,00,000
Total Assets 8,00,000
Total Non-current Liabilities 4,00,000
Shareholder’s Fund 2,00,000
Answer-Working Capital Turnover Ratio-4 times
114. Calculate Working Capital Turnover if Cost of Revenue from Operations is Rs.8,40,000; gross Profit
Ratio is 20% and excess of Current Assets over Current Liabilities is Rs.3,50,000.
Answer-Working Capital Turnover Ratio-3 times
115. The Current Liabilities of X Ltd. are Rs.80,000, Stock is Rs 54,000 and Liquid Ratio is 1.2. If the Cost of
Sales is Rs.2,80,000 and its Gross Profit is 20% above cost, find the Working Capital Turnover ratio.
Answer-Working Capital Turnover Ratio-4.8 times
116. Following is the Balance Sheet of Rama & Co. Ltd, as on 31st December,2012.

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Particulars Note No. Rs.
I. EQUITY AND LIABILITIES
(1) Shareholders' Fund
(a) Share Capital 3,00,000
(b) Reserves and Surplus 1,00,000
(2) Non-current Liabilities
Long-term Borrowings 3,00,000
(3) Current Liabilities
(a) Short-term Borrowings 1,00,000
(b) Trade Payables 1,30,000
(c) Short-term Provisions 70,000
Total 10,00,000
II. ASSETS
(1) Non-current Assets
(a) Fixed Assets - Tangible 3,00,000
(b) Non-current Investments 1,00,000
(2) Current Assets
(a) Inventories 2,20,000
(b) Trade Receivables 2,80,000
(c) Cash and Cash Equivalents 80,000
(d) Other Current Assets 1 20,000
Total 10,00,000
Note to Account
Particulars Rs.
Other Current Assets
Prepaid Expenses 10,000
Commission Receivable 10,000
20,000
Sales during the year was Rs.9,90,000. Calculate Working Capital Turnover ratio.
Answer-Working Capital Turnover Ratio-3.3 Times
117. Calculate Gross Profit Ratio from the following information.
Particulars Rs.
Opening Inventory 50,000
Purchases 1,50,000
Return Outwards 20,000
Wages 10,000
Revenue from Operations 2,50,000
Closing Inventory 40,000
Answer-Gross Profit Ratio-40%
118. Compute Gross Profit Ratio from the following information:
Revenue from Operations (Sales) Rs.4,00,000 and Gross Profit is 25% on cost.
Answer-Gross Profit Ratio-20%
119. A company earns a Gross Profit of 25% on cost. Its Credit Revenue from operations are twice its Cash
Revenue from Operations. If the Credit revenue from operations are Rs. 8,00,000, calculate the Gross
Profit Ratio of the company.
Answer-Gross Profit Ratio-20%
120. Compute Gross Profit Ratio from the following data:
Cash revenue from operations are 25% of total revenue from operations; Credit revenue
from operations are Rs.9,00,000.
Purchases Rs.8,20,000; Excess of Closing Stock over Opening Stock Rs.30,000.
Answer-Gross Profit Ratio-34.17%

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121. Calculate Gross Profit Ratio from the following data.
Particulars Rs.
Purchases : Cash 50,000
Credit 92,000
Carriage and Freight 10,000
Wages 30,000
Salaries 15,000
Return Outwards 2,000
Credit Revenue from Operations 2,00,000
Cash Revenue from Operations is 20% of the Total Revenue from Operations. Decrease in
the during year Rs.20,000
Answer-Gross Profit Ratio-20%
122. Calculate Gross Profit Ratio from the following information:
Particulars Rs.
Net Profit 80,000
Operating Expenses 30,000
Interest on Debentures 5,000
Gross Sales 4,50,000
Return Inwards 5,000
Answer-Gross Profit Ratio-25.84%
123. Calculate Gross Profit Ratio from the following information:
Average Stock-Rs.80,000
Stock Turnover Ratio-6 Times
Selling Price-25% above cost
Answer-Gross Profit Ratio-20%
124. Calculate Gross Profit Ratio from the following data:
Average Stock-Rs.1,20,000
Stock Turnover Ratio-8 Times
Average Trade Receivables-1,80,000
Debtors Turnover Ratio-7 Times
Cash sales was 10% of Net Revenue from operations(Sales)
Answer-Gross Profit Ratio-31.43%
125. If Opening Stock Rs.60,000; Closing Stock Rs. 1,00,000; Stock Turnover Ratio 8 Times; Selling Price
25% above cost; Calculate Gross Profit Ratio.
Answer-Gross Profit Ratio-20%
126. Determine the amount of Gross Profit, Sales and Gross Profit Ratio from the following information:
Average Stock-Rs.80,000
Stock Turnover Ratio-6 Times
Selling Price-(i) 25% above cost
(ii) 25% of sales.
Answer-Case-1-Gross Profit Ratio-20%
Case-2-Gross Profit Ratio-25%
127. Calculate inventory turnover ratio from the following: -
Rs.
Opening Inventory 92,400
Closing Inventory 67,600
Purchases 2,75,200
Revenue from Operations 5,00,000
Revenue from Operations Returns 20,000

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Ans. Inventory Turnover Ratio 3.75 Times.
128. Following is the Statement of Profit & Loss of Triveni Ltd. calculate Inventory Turnover Ratio:
STATEMENT OF PROFIT AND LOSS
For the year ended 31st March, 2015
I. Revenuer form Operations 10,00,000
II. Other Income 50,000
III. Total Revenue (I – II) 10,50,000
IV. Expenses
Purchase of Stock in Trade 5,36,000
Change in Inventories of Stock in Trade 1 25,000
Employee Benefit Exp. 1,20,000
Finance Costs 30,000
Other Expenses 24,000
Total Expenses 7,35,000
V. Profit before Tax (III – IV) 3,15,000
Less: Income Tax 1,25,000
VI. Profit after Tax 1,90,000
Notes to Accounts:
Particulars Rs.
1. Opening Inventory 95,000
Less: Closing Inventory 70,000
25,000
Ans. Inventory Turnover Ratio 6.8 times
129. Calculate Inventory Turnover Ratio and Average Age of Inventory from the following:
STATEMENT OF PROFIT AND LOSS
For the year ended 31st March, 2015
Particulars Note No. Rs.
I. Revenue from Operations 12,00,000
II. Expenses:
Purchase of Stock in Trade 6,50,000
Change in Inventories of Stock in Trade 1 (30,000)
Employee Benefit Expenses 2 2,40,000
Other Expenses 3 90,000
9,50,000
III. Profit before Tax (I – II) 2,50,000
Notes to Accounts:
Particulars Rs.
1. Change in Inventories of Stock in Trade
Opening Inventory 1,25,000
Less: Closing Inventory 1,55,000
(30,000)
2. Employee benefit Expenses:
Wages 1,48,000
Salaries 92,000
2,40,000
3. Other Expenses :
Manufacturing Expenses 72,000
Administration Expenses 10,000
Selling Expenses 8,000
90,000
Ans. Inventory Turnover Ratio 6 Times; Average Age of Inventory 61 days

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Hint. Cost of Revenue from Operations = Purchase of Stock in Trade + Change in Inventory + Wages +
Manufacturing Exp.
130. from the following data, calculate ‘Inventory Turnover Ratio’ when gross profit ratio is given 20% :
Rs.
Cash Sales 1,50,000
Credit Sales 2,50,000
Return Inward 25,000
Opening Inventory 25,000
Closing Inventory 35,000
Ans. 10 Times
131. calculate the (I) Inventory Turnover Ratio and (II) Average Age of Inventory from the following:-
Opening Inventory Rs. 54,000; Closing Inventory Rs. 66,000; Revenuer from Operations Rs. 5,00,000;
Gross profit Ratio 40% on Revenue from Operations.
Ans. (i) Inventory Turnover Ratio 5 Times and (II) Average Age of Inventory 73 days
132. compute Inventory Turnover Ratio from the following:
Rs.
Cost of Revenue from Operations 5,60,000
Purchases 4,40,000
Wages 1,30,000
Carriage Inwards 15,000
Opening Inventory 75,000
Ans. Closing Inventory Rs. 1,00,000; Inventory Turnover Ratio 6.4 times
Hint. Wages and Carriage Inwards are direct expenses. Hence, these will be included in cost of
revenue from operations.
133. From the following information, calculate Inventory Turnover Ratio :
Purchases Rs. 10,00,000; Revenue from Operations Rs. 12,00,000; Direct Expenses Rs. 48,000; Gross
Profit Ratio 15% on Revenue from Operations; Closing Inventory Rs. 1,64,000.
Ans. Opening Inventory Rs. 1,36,000; Inventory Turnover Ratio 6.8 times
134. Calculate Opening Inventory from the following information:
Purchases Rs. 5,70,000; Freight Rs. 20,000; Miscellaneous Expenses Rs. 10,000; Revenue from
Operations Rs. 5,00,000; Closing Inventory Rs. 70,000; Gross Loss 16% on Revenue from Operations.
Ans. Opening Inventory Rs. 60,000
Hints: (i) freight is component of Direct Expenses. Hence, it will be included in Cost of revenue from
Operations.
(iii) Miscellaneous Expenses being indirect expenses will not be included in
Cost of revenue from Operations.
135. From the given information, calculate the Inventory Turnover Ratio:
Revenue from Operations : Rs. 2,00,000; GP : 25%; Opening Inventory was 1/4th of the value of Closing
Inventory. Closing Inventory was 40% of Revenue from Operations.
Ans. Inventory Turnover Ratio 3 times
136.
Revenue from Operations Rs. 7,00,000
Gross Profit Rs. 1,40,000
Inventory Turnover Ratio 7 Times
Find out the value of Closing Inventory, if Closing Inventory is Rs. 16,000 more than the Opening
Inventory.
Ans. Closing Inventory Rs. 88,000
137.
Cash Revenue from Operations Rs. 1,00,000

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Credit Revenue from Operations Rs. 5,00,000
Gross Profit Rs. 1,20,000
Inventory Turnover Ratio 4 times
Calculate the value of Opening and Closing Inventory in each of the following alternative cases:
Case I if closing inventory was Rs. 1,00,000 in excess of opening inventory.
Case II if closing inventory was 2 times that in the beginning.
Case III if closing inventory was 2 times more than that in the beginning.
Case IV if closing inventory was 3 times that in the beginning.
Ans.
Opening Inventory (Rs.) Closing Inventory (Rs.)
Case I 70,000 1,70,000
Case II 80,000 1,60,000
Case III 60,000 1,80,000
Case IV 60,000 1,80,000
138. Rs. 3,00,000 is the cost of Revenue from Operations, Inventory turnover 8 times; Inventory at the
beginning is 2 times more than the inventory at the end. Calculate the values of Opening & Closing
inventories.
Ans. Opening Inventory Rs. 56,250; Closing Inventory Rs. 18,750
139. Rs. 1,50,000 is the cost of Revenue from Operations, Inventory turnover 8 times; Inventory at the
beginning is 1.5 times more than the inventory at the end. Calculate the values of Opening & Closing
inventories.
Ans. Opening Inventory Rs. 26,786; Closing Inventory Rs. 10,714
140. Average Inventory carried by a trader is Rs. 60,000; Inventory turnover ratio is 10 times. Goods are
sold at a profit of 10% on cost. Find out the profit.
Ans. Profit Rs. 60,000
141. Determine the amount of Revenue from Operation from the following particulars :-
Opening Inventory Rs. 40,000
Inventory Turnover Ratio 6 times
Gross Profit 20% of Revenue from Operations
You are informed that closing inventory is two times in comparison to opening inventory.
Ans. Revenue from Operations Rs. 4,50,000
142. A company’s inventory turnover is 5 times. Inventory at the end of the year is Rs. 4,000 more than
inventory at the beginning of the year. Revenue from Operations during the year (all credit) were Rs.
3,00,000. Rate of Gross Profit is 25% on cost of Revenue from Operations. Current Liabilities at the end
of the year were Rs. 50,000. Quick Ratio is 1 : 1. Calculate :-
(i) Cost of Revenue from Operations.
(ii) Opening inventory.
(iii) Closing inventory.
(iv) Quick Assets.
(v) Current Assets at the end.
Ans. (i) Rs. 2,40,000; (ii) Rs. 46,000; (iii) Rs. 50,000; (iv) Rs. 50,000; (v) Rs. 1,00,000.
143. Following information is given to you:
Revenue from Operations 8,00,000
Less: Purchases 5,90,000
Changes in Inventory
(Opening Inventory – Closing Inventory) (44,000 – 60,000) (-) 16,000
Direct Expenses 50,000 6,24,000
Gross Profit 1,76,000
BALANCE SHEET

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At at 31st March, 2012
Particulars Note No. Rs.
I. EQUITY AND LIABILITIES:
Shareholder’s Funds:
(a) Share Capital 4,50,000
(b) Reserve & Surplus 1 1,90,000
Non-Current Liabilities:
Long-term Borrowings 2 2,00,000
Current Liabilities :
(a) Trade Payables 1,50,000
(b) Other Current Liabilities 3 10,000
TOTAL 10,00,000
II. ASSETS :
Non-Current Assets :
Fixed Assets 7,20,000
Current Assets :
(a) Inventory 60,000
(b) Trade Receivables 1,75,000
(c) Cash & Cash Equivalents 25,000
(d) Other Current Assets 4 20,000
TOTAL 10,00,000
Notes:
(1) Reserve & Surplus:
General Reserve 1,20,000
Profit & Loss Balance 70,000
1,90,000
(2) Long-term Borrowings:
8% Debentures 2,00,000
(3) Other Current Liabilities:
Outstanding Expense 10,000
(4) Other Current Assets:
Prepaid Expenses 20,000
On the basis of the information’s given above, calculate any two of the following ratios:
(i) Liquid Ratio,
(ii) Inventory Turnover Ratio, and
(iii) Debt Equity Ratio.
Ans. Liquid Ratio 1.25 : 1; Inventory Ratio 12 Times; Debt Equity Ratio 0.3125 : 1.
144. Calculate Inventory Rs. 20,000; Purchases Rs. 2,40,000 and Closing Inventory Rs. 60,000. State,
giving reason, which of the following transactions will (a) increase (b) decrees or (c) not alter the
inventory turnover ratio.
(a) Goods purchased for Rs. 40,000.
(b) Sale of goods for Rs. 25,000 (Cost Rs. 30,000).
(c) Decrease in the value of closing inventory by Rs. 20,000.
(d) Increase in the value of closing inventory by Rs. 10,000.
(e) Goods costing Rs. 5,000 distributed as free samples.
Ans. Inventory Turnover Ratio 5 times
(i) Decrease : Since cost of revenue from operations remains unchanged whereas average
inventory increases.
(ii) Increase : Since cost of revenue from Operations increases whereas average inventory
decreases.
(iii) Increase : Since cost of revenue from operations increases whereas average inventory

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decreases.
(iv) Decrease : Since cost of revenue from operations decreases whereas average inventory
increases.
(v) Increase : Since cost of revenue from operations remains unchanged whereas average
inventory decreases.
145. Calculate Trade Receivables Turnover Ratio from the following :-
Rs.
Cash Revenue from Operations 3,40,000
Credit revenue from Operations 6,00,000
Opening Trade Receivables 75,000
Closing Trade Receivables 1,25,000
Ans. Trade Receivables Turnover Ratio 6 Times
146. Calculate Trade Receivables Turnover Ratio and Average Collection Period from the following :-
Rs.
Total Revenue from Operations for the year 12,00,000
Credit Revenue from Operations : 70% of Total Revenue from Operations
Revenue from Operations Returns (out of Credit Revenue from Operations) 40,000
Opening Trade Receivables 73,250
Closing Trade Receivables 86,750
Ans. Trade Receivables Turnover Ratio 10 Times; Average Collection Period 37 days
147. Calculate Trade Receivables Turnover Ratio and Average Collection Period from the following :-
Rs.
Total Revenue from Operations for the year 4,80,000
Cash Revenue from Operations : being 20% of Credit Revenue from Operations
Opening Trade Receivables 60,000
Excess of Closing Trade Receivables over Opening Trade Receivables 30,000
Ans. Trade Receivables Turnover Ratio 5.33 Times; Average Collection Period 68.48 days or 69 days
Working Notes :- (i) Credit Revenue from Operations = X Rs. 4,80,000.
(iii) Any fraction of a day would, in practice, mean next day.
148. Calculate Trade Receivables Turnover Ratio and Average Collection Period from the following
figures:-
Rs.
Total Revenue from Operations 10,00,000
Cash Revenue from Operations 1,50,000
Revenue from Operations Return 10,000
Opening Debtors 50,000
Opening B/R 10,000
Closing Debtors 60,000
Closing B/R 20,000
Ans. Trade Receivables Turnover Ratio 12 times; Average Collection Period 30.42 or 31 days.
149. From the following particulars determine the opening Trade Receivables:
Credit Revenue from Operations Rs. 4,32,000
Trade Receivables turnover Ratio 12 Times
Closing Trade Receivables Rs. 40,000
Ans. Opening Trade Receivables Rs. 32,000
150. Credit Revenue from Operations of X Ltd. during 1985 were Rs. 5,64,000. If trade receivables
turnover ratio is 6 times, calculate trade receivables in the beginning and at the end of the year. Trade
receivables at the end were Rs. 10,000 more than that at the beginning of the year.
Ans. Opening Trade Receivables Rs. 89,000 ; Closing Trade Receivables Rs. 99,000

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151. A Company made Credit Revenue from Operations of Rs. 8,76,000 in the year 1993. if Trade
Receivables Turnover Ratio is 18.25 times calculate :-
(i) Average Trade Receivables; and (ii) Closing Trade Receivables, if closing Trade Receivables are
three times in comparison to opening Trade Receivables.
Ans. (I) Average Trade Receivables Rs. 48,000
(II) Closing Trade Receivables Rs. 72,000
152. Calculate the amount of Opening Trade Receivables and Closing Trade Receivables from the
following particulars:
Cost of Revenue from Operations : Rs. 9,00,000
Gross Profit on Revenue from Operations : 25%
Cash Revenue from Operations : 20% of Credit Revenue from Operations
Trade Receivables Turnover Ratio : 5 Times
Closing Trade Receivables were 3 times than that in the beginning
Ans. Opening Trade Receivables Rs. 1,00,000; Closing Trade Receivables Rs. 3,00,000
153. Calculate Closing Trade Receivables from the following information:
cost of Revenue from Operations : Rs. 16,00,000
Gross Profit on Cost : 25%
Cash Revenue from Operations : 25% of Credit Revenue from Operations
Trade Receivables Turnover Ratio : 5 Times
Closing Trade Receivables were 1.5 times than that in the beginning.
Ans. Closing Trade Receivables Rs. 3,84,000
Hint : Ratio Between Opening and Closing Trade Receivables 2 : 3.
154. Following figures have been obtained from the books of Pawan Roadways Ltd :-
2010 2011
Revenue from Operations (at Gross Profit of 25%) 36,00,000 60,00,000
Trade Receivables on 1st January 5,40,000
Trade Receivables on 31st December 6,60,000 9,40,000
st
Inventory on 1 January 6,50,000
Inventory on 31st December 7,00,000 10,00,000
Calculate the Trade Receivables Turnover Ratio. Also Calculate Inventory Turnover Ratio. Give
necessary Comments.
Ans. 2010 : Trade Receivables Turnover Ratio 6 times;
2011 : Trade Receivables Turnover Ratio 7.5 times;
Inventory Turnover Ratio in 2010 4 Times; in 2011 5.29 Times
Comments :- (1) in 2011, Trade Receivables Turnover Ratio has increase from 6 times to 7.5
times. It indicates that amount from trade receivables is being collected more quickly.
(2) In 2011, Inventory Turnover Ratio has also increased. It indicates that inventory is being
rotated into revenue from operations more quickly. As such, the sales policy of the
management is quite efficient.
155. Calculate trade receivables turnover ratio from the following:
Credit Revenue from Operations 3,80,000
Revenue from Operations Returns 20,000
Trade Receivables on 1-04-2008 70,000
Trade Receivables on 31-03-2008 1,10,000
Less: Provision for Doubtful Debts 10,000 1,00,000
State giving reason, what will be the effect of the following on Trade Receivables Turnover Ratio:
(i) Received Rs. 20,000 from a customer.
(ii) Sale of goods on credit Rs. 30,000.
(iii) Cash Revenue from Operations Rs. 40,000.

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Ans. Trade Receivables Turnover Ratio 4 times. Effect on Trade Receivables Turnover Ratio : (i)
Increase (ii) Decrease (ii) Not alter.
Hint : Provision for Doubtful debts are ignored while calculating Trade Receivables Turnover
Ratio.
156. Calculate Trade Payables Turnover Ratio and Average Payment Period from the following:
Rs.
Total Purchases 24,00,000
Cash Purchases 6,40,000
Purchases Returns (out of credit purchases) 60,000
Opening Balance of Creditors 3,00,000
Opening Balance of Bills Payables 20,000
Closing Balance of Creditors 3,50,000
Closing Balance of Bills Payables 10,000
Ans. Trade Payables turnover Ratio 5 times; Average Payment Period 73 days
157. On the basis of the following information calculate (i) Trade Receivables Turnover Ratio; (ii) Average
Collection Period; (iii) Trade Payables Turnover Ratio and (iv) Average Payment Period.
Rs.
Debtors 54,00,000
Creditors 20,00,000
Revenue from Operations 5,25,00,000
Bills Payable 5,00,000
Bills Receivables 6,00,000
Purchases 3,15,00,000
Ans. (i) 8.75 times; (ii) 42 days; (iii) 12.6 times; (iv) 29 days.
158. Calculate Working Capital Turnover Ratio from the following:
Rs.
Credit Revenue from Operations 8,00,000
Cash Revenue from Operations 12,60,000
Current Assets 7,20,000
Current Liabilities 3,24,000
Revenue from Operations Returns 80,000
Ans. Working Capital Turnover Ratio 5 Times
159. Calculate Working Capital Turnover Ratio from the following:
Rs.
Inventory 6,00,000
Trade Receivables 5,00,000
Cash 1,00,000
Trade Payables 2,00,000
Bank Overdraft 1,20,000
Cost of Revenue from Operations 52,80,000
Ans. Working Capital Turnover Ratio 6 Times
160. Calculate Working Capital Turnover Ratio from the following information:
Rs.
Current Assets 8,60,000
Current Liabilities 3,40,000
Cost of Revenue from Operations 20,00,000
Gross Profit 30% of Cost
Ans. Working Capital Turnover Ratio = = 5 Times
161. Calculate Working Capital Turnover Ratio from the following information:
Rs.

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Inventory 3,10,000
Trade Receivables 1,30,000
Cash 20,000
Trade Payables 60,000
Cost of Revenue from Operations 30,40,000
G.P. 24% of Sales
Ans. Working Capital Turnover Ratio = = 10 Times
162. Following information is given to you :
Trade Receivables on 1st April, 2014 Rs. 6,80,000
st
Trade Receivable on 31 March, 2015 Rs. 8,20,000
Trade Receivables Turnover Ratio 6 Times
Credit Revenue from Operations 80% of Revenue from Operations
Working Capital Turnover Ratio 9 times
Current Ratio 2.25
Calculate :
(i) Revenue from Operations
(ii) Working Capital
(iii) Current Assets.
Ans. (i) Revenue from Operations Rs. 56,25,000 (ii) Working Capital Rs. 6,25,000 (iii) Current assets Rs.
11,25,000.
163. Calculate Working Capital Turnover Ratio from the following:
Rs.
Revenue from Operations 39,20,000
Non-Current Assets 21,00,000
Total Assets 36,00,000
Shareholders’ Funds 18,00,000
Non-Current Liabilities 10,00,000
Ans. 5.6 Times
164. From the following Balance Sheet, calculate Working Capital Turnover Ratio :
BALANCE SHEET
As at 31st March, 2012
Particulars Note No. Rs.
I. EQUITY AND LIABILITIES:
Shareholder’s Funds :
(a) Share Capital 10,00,000
(b) Reserve & Surplus 4,00,000
Non-Current Liabilities :
Long-term Borrowings 4,00,000
Current Liabilities :
(a) Trade Payables 1,90,000
(b) Other Current Liabilities 1 10,000
TOTAL 20,00,000
II. ASSETS :
Non-Current Assets :
Fixed Assets 16,00,000
Current Assets:
(a) Inventory 1,80,000
(b) Trade Receivables 1,10,000
(c) Cash & Cash Equivalents 2 1,10,000
TOTAL 20,00,000

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Notes :
(1) Other Current Liabilities :
Outstanding Expenses 10,000
(2) Cash & Cash Equivalents :
Bank 80,000
Cash 30,000
1,10,000
Revenue from Operations for the year 2012 were Rs. 30,00,000.
Ans. Working Capital Turnover Ratio 15 Times
165. Calculate Operating Ratio from the following information:
Particulars Rs.
Revenue from operations 1,50,000
Cost of revenue from operations 50,000
Operating Expenses 20,000
Answer-Operating Ratio-46.67%
166. From the details given below, calculate, the following ratios :
(i) Gross Profit Ratio
(ii) Stock Turnover Ratio
(iii) Operating Ratio
Particulars Rs.
Revenue from operations (Sales) 1,50,000
Cost of revenue from operations 1,20,000
Opening Stock 29,000
Closing Stock 31,000
Debtors 16,000
Operating Expenses 16,000
Net Fixed Assets 1,10,000
Answer-Gross Profit Ratio-20%, Stock Turnover Ratio-4 Times, Operating Ratio-90.67%
167. Following is the Statement of Profit and Loss of Star Ltd., for the year ended 31st March, 2013.
calculate the Operating Ratio:
Particulars Note No. Rs.
I. Revenue from Operations (Sales) 5,00,000
II. Other Income 30,000
III. Total Revenue (I + II) 5,30,000
IV. Expenses
Purchases of Stock-in-Trade 3,25,000
Changes in Inventories of Stock-in-trade (25,000)
Employees Benefit Expenses 30,000
Other Expenses 1 66,000
Total Expenses 3,96,000
V. Profit before Tax (III-IV) 1,34,000
Notes to Accounts
Particulars Rs.
1. Other Expenses
Administrative Expenses 22,000
Selling & Distribution Expenses 24,000
Loss on Sale of Fixed Asset 20,000
66,000
Answer-Operating Ratio-75.20%
168. Following is the Statement of Profit and Loss of Royal Products Ltd., for the year ended 31st March,
2013:

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Particulars Note No. Rs.
I. Revenue from Operations (Sales) 20,00,000
II. Other Income 40,000
III. Total Revenue (I + II) 20,40,000
IV. Expenses
Cost of Material Consumed 10,70,000
Change in Inventories of Finished Goods and Works-in 50,000
Progress
Employees Benefit Expenses 1 80,000
Finance Cost 2 30,000
Depreciation and Amortization expenses 30,000
Other Expenses 3 1,40,000
Total Expenses 14,00,000
V. Profit before Tax (III-IV) 6,40,000
Notes to Accounts
Particulars Rs.
1. Employees Benefit Expenses
Wages 50,000
Salaries 30,000
80,000
2. Finance Cost
Interest on Bank Overdrafts 5,000
Interest on Debentures 25,000
30,000
3. Other Expenses
Administrative Expenses 50,000
Selling & Distribution Expenses 40,000
Loss on Sale of Fixed Asset 50,000
1,40,000
Find Gross Profit Ratio and Operating Ratio.
Answer-Gross Profit Ratio-41.50%, Operating Ratio-66.25%
169. Find Gross Profit Ratio from the following information:
Particulars Rs.
Cash Revenue from operations 1,40,000
Credit revenue from operations 4,80,000
Revenue from operations return 20,000
Operating Ratio 80%
Depreciation 30,000
Administrative Expenses 40,000
Selling And Distribution Expenses 20,000
Loss on sale of Fixed Assets 10,000
Profit from Sale of Investment 15,000
Answer-Gross Profit Ratio-35%
170. Compute Operating Ratio and Operating Profit Ratio from the following information:
Particulars Rs.
Revenue from operations (Gross) 10,50,000
Revenue from operations (Return) 50,000
Cost of Revenue from Operations 5,80,000
Office Expenses 20,000
Administrative Expenses 70,000
Selling And Distribution Expenses 60,000
Interest on Debentures 40,000

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Wages 80,000
Loss on sale of Assets 30,000
Interest on Investments 10,000
Depreciation 50,000
Answer-Operating Ratio-78%, Operating Profit Ratio-22%
171. Compute Operating Profit Ratio in the following cases:
Case I. Net Revenue from Operations (Sales) Rs.8,00,000 and Operating Profit Rs.1,80,000
Case II. Operating Cost Rs.6,00,000 and Revenue from Operations Rs.8,00,000
Case III. Revenue from Operations Rs.5,00,000, Gross Profit 25% on cost, Operating
Expenses Rs.40,000
Answer-Case I-Operating Profit Ratio-22.5%
Case II-Operating Profit Ratio-25%
Case III-Operating Profit Ratio-12%
172. From the following calculate:
(a) Net Profit Ratio
(b) Operating Profit Ratio
S.No Particulars Rs.
1. Revenue from operations 2,00,000
2. Gross Profit 75,000
3. Office Expenses 15,000
4. Selling Expenses 26,000
5. Interest on Debentures 5,000
6. Accidental Losses 12,000
7. Income from Rent 2,500
8. Commission Received 2,000
Answer-Net Profit Ratio-10.75%, Operating Profit Ratio-18%
173. Calculate Net Profit Ratio, Operating Ratio and Operating Profit Ratio from the Following Statement
of Profit and Loss of Golden Sales Ltd., for the year ended 31st March, 2013:
Particulars Note No. Rs.
I. Revenue from Operations (Sales) 12,00,000
II. Other Income 50,000
III. Total Revenue (I + II) 12,50,000
IV. Expenses
Purchase of Stock-in-Trade 8,00,000
Change in Inventories of Stock-in-Trade (30,000)
Employees Benefit Expenses 1,50,000
Finance Cost 1 25,000
Depreciation and Amortization expenses 20,000
Other Expenses 2 40,000
Total Expenses 10,05,000
V. Profit before Tax (III-IV) 2,45,000
VI. Profit after Tax 1,47,000
Notes to Accounts
Particulars Rs.
1. Finance Cost
Debenture Interest 25,000
2. Other Expenses
Loss on Sale of Fixed Asset 10,000
Administrative & Selling Expenses 30,000
40,000
Answer-Net Profit Ratio-12.25%, Operating Ratio-80.83%, Operating Profit Ratio-19.17%

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174. Calculate Gross Profit Ratio, Operating Ratio, Operating Profit Ratio and Net Profit Ratio from the
following information.
Particulars Note No. Rs.
Cost of Material Consumed 8,00,000
Change in Inventories of Finished Goods and Work-in- 70,000
Progress
Employees Benefit Expenses :
Wages 1,10,000
Salary 40,000
Other Expenses :
Administrative Expenses 60,000
Selling & Administrative Expenses 80,000
Carriage 10,000
Loss on sale of Asset 40,000
Bad Debts 10,000
Depreciation 50,000
Revenue from Operation (Sales) 15,00,000
Interest and Dividend received 75,000
Income tax 80,000
Answer-Gross Profit Ratio-34%, Operating Ratio-82%, Operating Profit Ratio-18%, Net Profit
Ratio 15%
175. Gross Profit of a company was 30%. Its Cash Revenue from Operations Rs.5,00,000 and its Credit
Revenue from Operations were 80% of Total sales. If its Operating Expenses were Rs.3,00,000; Non-
operating Loss/Expenses were Rs.1,20,000 and Non-operating Incomes were Rs.50,000 determine its
Net Profit Ratio.
Answer-Net Profit Ratio-15.20%
176. From the following, calculate Return on Investment (or Return on Capital Employed)
S.No Items Amount (Rs.)
1. Share Capital 50,000
2. Reserves and Surplus 25,000
3. Net Fixed Assets 2,25,000
4. Non-current Trade Investment 25,000
5. Current Assets 1,10,000
6 12% Long Term Borrowings 2,00,000
7 Current Liabilities 85,000
Net Profit before Tax-Rs. 60,000
Answer- Return on investment or Return on Capital Employed-30.54%
177. Net Profit after Interest but before tax is Rs.1,40,000; 15% Long-term Debts Rs.4,00,000;
Shareholders’ Fund Rs.2,40,000, Tax rate 50%. Calculate Return on Capital Employed.
Answer- Return on investment or Return on Capital Employed-31.25%
178. Calculate Return on Investment from the following information:
Net Profit after tax Rs.6,50,000; 12.5% Convertible Debentures Rs.8,00,000; Income Tax
50%; Fixed Assets at Cost Rs.24,60,000; Depreciation Reserve Rs.4,60,000; Current Assets
Rs.15,00,000; Current Liabilities Rs.7,00,000.
Answer- Return on investment or Return on Capital Employed-50%
179. Compute Return on Investment from the following information of X Ltd., as on 31st March, 2013:
Revenue from Operations Rs.20,00,000; Gross Profit Ratio 30%; Office and Administration
Expenses Rs.1,80,000; Selling and Distribution Expenses Rs.1,20,000; Interest Paid on Long-term
Debts Rs.20,000; Depreciation Rs.30,000; Bad Debts Rs.5,000; Provision for Tax@30%.

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X Ltd. has Non-current Assets Rs.10,00,000; Current Assets Rs.6,00,000 and Current
Liabilities Rs.3,25,000
Answer- Return on investment or Return on Capital Employed-20.78%
108. During 2012-13, Golden Star Ltd. has earned 20% as return on its Capital Employed
amounting to Rs.30,00,000 while it has 14% Long-term Debts amounting Rs 20,00,000. Is it
worthwhile to raise Long-term Debts? If yes, what is the amount of gain and gain% to
Proprietors’ of the fund by raising Long-Term Debts, if tax rate is 40%.
Answer-Rate of Return to Proprietors-19.2%, Net % gain to Proprietors-5.2%
180. Balance Sheet of Golden Star Ltd, as at 31st March, 2013 is as follows:
Particulars Note No. Rs.
I. EQUITY AND LIABILITIES
(1) Shareholders' Fund
(a) Share Capital 1 8,00,000
(b) Reserves and Surplus 3,00,000
(2) Non-current Liabilities
Long-term Borrowings 2 4,00,000
(3) Current Liabilities
(a) Short-term Borrowings 2,00,000
(b) Trade Payables (Creditors) 2,00,000
(c) Other Current Liabilities 1,00,000
(d) Short-term Provisions 2,00,000
Total 22,00,000
II. ASSETS
(1) Non-current Assets
(a) Fixed Assets – (Tangible Assets) 9,00,000
(b) Non-current Investments 3 3,00,000
(c) Long-term Loans and Advances 50,000
(2) Current Assets
(e) Inventories 4,00,000
(f) Trade Receivables 4,50,000
(g) Cash and Cash Equivalents 1,00,000
Total 22,00,000
Note to Accounts
Particulars Rs.
1. Share Capital
Equity Share Capital 6,00,000
8% Preference Share Capital 2,00,000
8,00,000
2. Long-Term Borrowings
10% Debentures 4,00,000
3. Non-current Investments
8% Trade Investments 2,00,000
9% Non-trade Investments 1,00,000
3,00,000
Net Profit before Tax was Rs.2,00,000
Compute Return on Capital Employed for the year.
Answer- Return on investment or Return on Capital Employed-16 %
181. From the following Balance sheet of Venus Ltd., as at 31st March, 2013, compute Return on
Investment Ratio:
Particulars Note No. Rs.
I. EQUITY AND LIABILITIES

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(1) Shareholders' Fund
(a) Share Capital 10,00,000
(b) Reserves and Surplus 2,70,000
(2) Non-current Liabilities
(a) Long-term Borrowings (10%) 4,00,000
(b) Long-term Provisions 50,000
(3) Current Liabilities
(a) Trade Payables (Creditors 2,00,000
(b) Other Current Liabilities 1,00,000
(c) Short-term Provisions 80,000
Total 21,00,000
II. ASSETS
(1) Non-current Assets
(a) Fixed Assets 11,40,000
(b) Non-current Investments (Trade) 2,00,000
(c) Long-term Loans and Advances 80,000
(2) Current Assets
(a) Inventories 2,00,000
(b) Trade Receivables 3,00,000
(c) Cash and Cash Equivalents 1,40,000
(d) Other Current Assets 1 40,000
Total 21,00,000
Note: Non-trade Investments are not used for operation of business while Trade Investments
are used for the promotion of Trade for the company so interest on Non-trade Investments is
ignored.
Answer- Return on investment or Return on Capital Employed-25.58%
182. Calculate Gross Profit Ratio from the following figures :-
Rs.
Gross Profit 90,000
Revenue from Operations 3,20,000
Revenue from Operations Returns 20,000
Ans. G.P. Ratio 30%
183. The following figures have been taken from the published accounts of G. Associates for the two
successive years:
2001 2002
Revenue from Operations 2,10,000 4,20,000
Gross Profit 52,500 84,000
Comment upon the profitability for the two years.
Ans. G.P. Ratio 2001 – 25%; 2002 – 20%
184. Calculate Gross Profit Ratio from the following figures :-
Opening Inventory Rs. 40,000; Closing Inventory Rs. 60,000; Purchases Rs. 7,10,000; Return Outwards
Rs. 10,000; Wages Rs. 80,000; Cash Revenue from Operations Rs. 3,45,000; Credit Revenue from
Operations Rs. 6,30,000; Return Inward Rs. 25,000.
Ans. G.P. Ratio 20%.
185. Calculate Gross Profit Ratio from the following figures :-
Cash Revenue from Operations Rs. 4,20,000; Credit Revenue from Operations Rs. 6,00,000; Revenue
from Operations Returns Rs. 20,000; Cost of Revenue from Operations Rs. 7,50,000.
Ans. G.P. Ratio 25%
186. Calculate G.P. ratio from the following :-

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Net Profit Rs. 40,000; Office Expenses Rs. 20,000; Selling Expenses Rs. 36,000; Net Revenue from
Operations Rs. 6,00,000.
Ans. G.P. Ratio 16%
187. Calculate G.P. ratio from the following :-
Rs.
Credit Revenue from Operations 2,40,000
Cash Revenue from Operations
(being 20% of total Revenue from Operations)
Purchases 2,20,000
Excess of opening inventory over closing inventory 14,000
Ans. G.P. Ratio 22%
188. Calculate G.P. Ratio from the following :-
Credit Revenue from Operations were 1/4th to Total Revenue from Operations. Credit Revenue from
Operations were Rs. 1,20,000. Credit Purchases were 1/5th of Cash Purchases. Credit Purchases were
Rs. 40,000. Opening Inventory Rs. 70,000. It was Rs. 20,000 more than Closing Inventory; Carriage Rs.
15,000, Wages Rs. 45,000.
Ans. G.P. Ratio 33.33%
189. Compute the Gross Profit Ratio from the following:
Revenue from Operations Rs. 5,60,000; Gross Profit 40% on cost.
Ans. 28,57%
190. A company earns a gross profit of 25% on cost. Its credit revenue from operations are twice its cash
revenue from operations. If the credit sales are Rs. 8,00,000, calculate the gross profit ratio of the
company.
Ans. G.P. Ratio 20%
191. Gross Profit of a Company is 20% of Cost of Revenue from Operations. Its Cash Revenue from
Operations are 1/3rd of its Credit Revenue from Operations. Calculation the G.P. Ratio if the Cash
Revenue from Operations are Rs. 3,00,000.
Ans. G.P. Ratio 16.67%.
192. Following information is available for the year ending 31st March, 2008, calculate gross profit ratio:
Rs.
Cash Revenue from Operations 25,000
Credit Revenue from Operations 75,000
Purchases : Cash 15,000
Credit 60,000
Carriage Inwards 2,000
Salaries 25,000
Decrease in Inventory 10,000
Return Outwards 2,000
Wages 5,000
Ans. G.P. Ratio 10%.
193. Average Inventory Rs. 60,000; Inventory Turnover Ratio 5 Times; Selling Price 40% above cost.
Calculate Gross Profit Ratio.
Ans. G.P. Ratio 28,57%
194. Given the following information:
Rs.
Revenue from Operations 3,40,000
Cost of Revenue from Operations 1,20,000
Selling Expenses 80,000
Administrative Expenses 40,000

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Calculate Gross Profit Ratio and Operating Ratio.
Ans. G.P. Ratio 64.71%; Operating Ratio 70.59%
195. Calculate operating ratio from the following:
Rs.
Net Revenue from Operations 12,00,000
Credit Revenue from Operations 8,00,000
Gross Profit 3,00,000
Office Expenses 80,000
Selling Expenses 40,000
Loss by Fire 20,000
Ans. Operating Ratio 85%.
Hint : Net Revenue from Operations means Credit Revenue from Operations + Cash Revenue from
Operations – Revenue from Operations Return.
196. Compute Operating Ratio from the following Statement of Profit and Loss of X Ltd. for the year
ended 31st March, 2016
STATEMENT OF PROFIT AND LOSS
For the year ended 31st March, 2016
Particulars Note No. Rs.
I. Revenue from Operations 24,00,000
II. Add: Other Incomes 20,000
III. Total Revenue I + II 24,20,000

IV. Less: Expenses

Cost of Materials Consumed 14,10,000
Change in Inventories of Finished Goods
And Work in Progress (30,000)
Employee Benefit Expenses 2,82,000
Finance Costs 20,000
Depreciation and Amortization Expenses 60,000
Other Expense 1,20,000
Total Expenses 18,62,000
V. Profit before Tax (III – IV) 5,58,000
Notes to Accounts:
Particulars Rs.
1. Other Expenses:
Office Expenses 54,000
Loss by Fire 50,000
Donations 16,000
1,20,000
Ans. Operating Ratio 74%
197. Calculate Cost of Goods Sold from the following information:
Rs.
Operating Ratio 90%
Office Exp. 30,000
Selling Exp. 20,000
Revenue from Operations 7,00,000
Revenue from Operations Return 40,000
Ans. Cost of Revenue from Operations Rs. 5,44,000
198. Calculate (i) Operating Profit Ratio and (ii) Net Profit Ratio from the following : -
Rs.
Revenue from Operations 8,30,000

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Return Inwards 30,000
Cost of Revenue from Operations 5,00,000
Office Expenses 40,000
Selling Expenses 18,000
Interest on Debentures 12,000
Loss by Accident 24,000
Interest received on Investments 10,000
Ans. Operating Profit Ratio 30.25%; N.P. Ratio 27%
199. Calculate (i) G.P. Ratio,(ii) Operating Ratio, (iii) Operating Profit Ratio, (iv) Inventory Turnover Ratio
and (v) Working Capital Turnover Ratio from the following figures:
Rs.
Purchases 18,30,000
Direct Expenses 4,10,000
Opening Inventory 3,60,000
Closing Inventory 4,40,000
Operating Expenses 5% of Sales
Revenue from Operations 30,00,000
Current Assets (including inventory) 7,00,000
Current Liabilities 2,00,000
Ans. (i) 28% (ii) 77% (iii) 23% (iv) 5.4 times (v) 6 times
Hint: working Capital Turnover Ratio =
200. Gross Profit ratio of a Company was 25%. Its cash revenue from operations were Rs. 5,00,000 and its
credit revenue from operations were 90% of the total revenue from operations. If the indirect
expenses of the company were Rs. 1,50,000, calculate it net profit ratio.
Ans. Net Profit Ratio 22%
st
201. Following is the Balance Sheet of Ganesh Ltd. as at 31 March, 2012:
Particulars Note No. Rs.
I. EQUITY AND LIABILITIES:
Shareholder’s Funds:
(a) Share Capital 30,00,000
(b) Reserve & Surplus 1 23,00,000
Non-Current Liabilities:
Long-term Borrowings 2 22,00,000
Current Liabilities :
Trade Payables 4,00,000
TOTAL 79,00,000
II.
Notes:
(1) Reserve & Surplus:
Reserve 13,00,000
Profit for the year 10,00,000
23,00,000
(2) Long-term Borrowings:
8% Loans 10,00,000
10% Debentures 12,00,000
22,00,000
Calculate ‘Return on Capital Employed’.
Ans. Return on Capital Employed 16%
202. Calculate Return on Capital Employed from the following:
Rs.

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Rs.
Share Capital 7,20,000
Reserve & Surplus 6,50,000
Current Liabilities 7,50,000
Non Current Assets 15,00,000
Inventory 5,00,000
Trade Receivables 6,00,000
Cash & Cash Equivalents 1,00,000
10% Long term Borrowings 5,00,000
Long term Provisions 80,000
Net Profit before tax R. 2,50,000
Ans. 15.38%
203. Net Profit after Interest but before Tax Rs. 65,000; Shareholder’s Funds Rs. 3,00,000; 15% Long-Term
Debt Rs. 1,00,000. Calculate Return on Investment.
Ans. 20%
Note: It is assumed that Shareholder’s Funds include current Year’s Profits.
204. Calculate ‘Return on Capital Employed’ from the following details :-
Gross Profit Rs. 2,70,000; Administration Expenses Rs. 60,000; Selling Expenses Rs. 30,000; 12% Long-
Term Debts Rs. 2,00,000; Tax Rate 40%; Non Current Assets Rs. 6,00,000; Current Assets Rs. 2,00,000;
and Current Liabilities Rs. 50,000.
Ans. R.O.I 24%
205. Calculate Return on Investment from the following :-
Rs.
Non Current Assets 2,00,000
Current Assets 1,50,000
Current Liabilities 50,000
Opening Inventory 40,000
Closing Inventory 60,000
Purchases 6,00,000
Carriage Inwards 15,000
Revenue from Operations 7,00,000
Office Expenses 30,000
Interest on Debentures 12,000
Tax 7,000
Ans. R.O.I 25%
Hint :- profit before interest and tax = Rs. 75,000.
206. Calculate Return on Investment from the following details :-
Rs.
Equity Share Capital 5,00,000
12% Preference Share Capital 1,00,000
Reserves 1,44,000
15% Loans 2,40,000
10% Debentures 1,20,000
Current Liabilities 75,000
Net Profit (after interest and Income Tax) 96,000
Rate of Income Tax 50%
Ans. R.O.I 20%
207. A Company has a loan of Rs. 30,00,000 as part of its capital employed Interest payable on the loan is
12% and the R.O.I. of the company is 25%. The rate of income tax is 40%. What is the gain to
shareholders due to the loan raised by the company?

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Ans. Net gain to shareholders Rs. 2,34,000
208. Following particulars are obtained from the books of Assam Tea Ltd. as at 31st March, 2012 :-
Rs.
Equity Share Capital 2,30,000
10% Preference Share Capital 2,00,000
Reserve and Surplus 1,70,000
15% Long term Loans 80,000
Current Liabilities 3,60,000
Net Profit after Interest and Tax = Rs. 1,80,000
Tax Rate = 40%
Calculate Return on Investment
Ans. 45.88%
209. On the basis of the following information calculate (i) Liquid Ratio, (ii) Gross Profit Ratio and (iii)
Operating Ratio :
Rs.
Net Working Capital 1,76,00,000
Current Assets 3,96,00,000
Inventory 2,31,00,000
Revenue from Operations 15,00,00,000
Cost of Revenue from Operations 10,20,00,000
Operating Expenses 1,80,00,000
Ans. (i) Liquid Ratio .75, (ii) Gross Profit Ratio 32%, (iii) Operating Ratio 80%
210. Calculate any three of the following ratios with the help of the following information :
(i) Operating Ratio, (ii) Current Ratio, (iii) Gross Profit Ratio, (iv) Inventory Turnover Ratio and (v)
Debt Equity Ratio.
Information : Equity Share Capital Rs. 5,00,000; 12% Debentures Rs. 6,00,000; 9% Preference
Share Capital Rs. 3,00,000; General Reserve Rs. 1,00,000; Revenue from Operations Rs. 10,00,000;
Opening Inventory Rs. 80,000; Purchases Rs. 6,00,000; Wages Rs. 1,00,000; Closing Inventory Rs.
1,00,000; Selling and distribution expenses Rs. 20,000; Other current assets Rs. 5,00,000 and
Current Liabilities Rs. 3,00,000.
Ans. (i) 70%; (ii) 2 : 1; (iii) 32%; (iv) 7.56 times; (v) 067 : 1
211. From the following information, calculate any three of the following ratios :-
(a) Debt-Equity Ratio;
(b) Proprietary Ratio;
(c) Return on Investment (R.O.I.);
(d) Working Capital Turnover Ratio; and
(e) Interest Coverage Ratio
Information :-
Rs.
Equity Share Capital 1,20,000
10% Preference Share Capital 40,000
General Reserve 1,60,000
Loan @ 15% interest 2,00,000
Revenue from Operations for the year 5,60,000
Gross Profit 1,79,200
Tax paid during the year 40,000
Profit for the current year after interest and tax 80,000
Fixed Assets 5,20,000
Current Assets 1,05,000
Current Liabilities 25,000

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Ans. (i) 0.5 : 1; (ii) 64%; (iii) 25% and; (iv) 7 Times; (v) 5 Times
Hints:-
(i) Debt Equity Ratio =
(ii) Shareholder’s Funds = Equity Share Capital + Pref. Share Capital + General Reserve +
Current Year’s Profit = Rs. 4,00,000.
(iii) Working Capital Turnover Ratio =

212. From the following information obtained from the books of Ramnath Ltd. as on 31.3.2012, calculate
(a) Quick Ratio and (b) Stock Turnover Ratio:
Inventory (Stock) Rs. 1,00,000; Trade Receivables (Debtors) Rs. 1,20,000; Advance Tax Rs.
4,000; Cash Rs. 60,000; Trade Payables Rs. 1,05,000; Bank Overdraft Rs. 8,000; Cost of goods sold Rs.
4,20,000.
Additional Information:
Closing Inventory (Stock) was Rs. 20,000 more than the Opening Inventory (Stock)
Answer-Quick Ratio-1.59:1, Stock Turnover Ratio-4.67 Times
213. On the basis of the following information, calculate:
(i) Debt-Equity Ratio and
(ii) Working Capital Turnover Ratio
Particulars Rs.
Net Sales (Net Revenue from operations) 60,00,000
Cost of revenue from operations 45,00,000
Other Current Assets (Except Inventories) 11,00,000
Current Liabilities 4,00,000
Share Capital 6,00,000
6% Debentures 3,00,000
9% Loan 1,00,000
Debenture Redemption Reserve 2,00,000
Closing Inventory 1,00,000
Answer-Debt-Equity Ratio-0.5:1, Working Capital turnover Ratio-7.5 Times
214. A Company’s Stock Turnover is 5 times. Stock at the end is Rs. 20,000 more than that at the
beginning. Revenue from Operations i.e., sales are Rs. 8,00,000. Rate of Gross Profit on cost ¼, Current
Liabilities Rs. 2,40,000 and Acid Test Ratio-0.75.
Calculate Current Ratio.
Answer-1.325:1
215. Calculate Current Ratio of a company from the following information:
Stock Turnover Ratio-4 times
Stock in the beginning was Rs. 20,000 less than stock at the end
Revenue from operations (Sales) Rs. 6,00,000
Gross Profit Ratio-25%
Current Liabilities Rs. 60,000
Quick Ratio-0.75:1
Answer-2.79:1

216. The following information is provided:

Debtors Turnover Ratio: 4 Times; Stock Turnover Ratio: 8 Times; Current Ratio: 3;
Average Debtors: Rs. 1,80,000; Working Capital Turnover Ratio: 8 Times; Cash Sales 25% of

‘Mangal Prabhat’ 39, Shree Ram Colony, Sector 2, Vidyadhar Nagar, Jaipur | Ph.: 0141-2232667 P a g e | 43
Accountancy COMPILED BY: CA. AKSHAY BADAYA (+91 9414775218)
Revenue from Operations; Gross Profit Ratio 100/3%; Closing Stock Rs. 10,000 in excess of
Opening Stock.
Based on the above information, calculate (a) Revenue from Operation (Sales) (b)
Cost of Revenue from Operations (c) Closing Stock.
Answer-Revenue from Operations-Rs. 9,60,000, Cost of Revenue from Operations-6,40,000,
Closing Stock-Rs 75,000.
217. From the following information, calculate any two of the following ratios:
(i) Liquid Ratio
(ii) Proprietary Ratio
Particulars Rs. Particulars Rs.
Net Revenue from Operations 5,00,000 Total Current Liabilities 1,50,000
Gross Profit 1,50,000 Share Capital 4,00,000
Total Current assets 3,00,000 Reserves & Surplus 50,000
Closing stock 25,000 Fixed Assets 6,00,000
Answer-Liquid Ratio-1.8:1, Proprietary Ratio-0.5:1
218. From the following information, calculate the following ratios:
(i) Net Profit Ratio
(ii) Debt-equity Ratio
(iii) Quick Ratio
Particulars Rs. Particulars Rs.
Paid up Capital 20,00,000 Indirect Expenses 2,00,000
Capital Reserve 2,00,000 Current Assets 4,00,000
9% Debentures 8,00,000 Current Liabilities 3,00,000
Net Revenue from Operations (Sales) 14,00,000 Opening Stock 50,000
Closing Stock 20% more than Opening Stock, GP-8,00,000
Answer-Net Profit Ratio-42.86%, Debt-equity Ratio-0.286:1, Quick Ratio-1.13:1
219. Calculate Cost of Revenue from Operations from the following information:
Revenue from Operations (Sales) Rs.12,00,000; Revenue from Operations Return
Rs.80,000; Operating Expenses Rs.1,82,000; Operating Ratio-92%
Answer-Cost of Revenue from Operations-Rs.8,48,400
220. Net Profit Ratio of a Company was 20%.Its Indirect Expenses were Rs.80,000 and Cash Sales was
Rs.3,00,000. The Credit Sales was 80% of the Total Sales. Calculate the Gross Profit Ratio of the
Company.
Answer-Gross Profit Ratio-25.33%
221. From the following information, calculate any two of the following ratios:
(i) Operating Ratio
(ii) Stock Turnover Ratio
(iii) Proprietary Ratio
Particulars Rs. Particulars Rs.
Cash Revenue from Operations 10,00,000 Opening Stock 1,50,000
Credit Revenue from Operations 120% of Closing Stock Rs.20,000 more
Cash Sales than opening stock
Operating Expenses 10% of Current Assets 3,00,000
Total
Sales
Rate of Gross Profit 40% Current Liabilities 2,00,000
Share Capital 6,00,000 Fixed Assets 5,00,000
Answer-Operating Ratio-70%, Stock Turnover Ratio- 8.25 Times, Proprietary Ratio-0.75:1 or 75%
222. From the following information, calculate any two of the following ratios:

‘Mangal Prabhat’ 39, Shree Ram Colony, Sector 2, Vidyadhar Nagar, Jaipur | Ph.: 0141-2232667 P a g e | 44
Accountancy COMPILED BY: CA. AKSHAY BADAYA (+91 9414775218)
(i) Liquid Ratio
(ii) Gross Profit Ratio
(iii) Debt-equity Ratio
Particulars Rs. Particulars Rs.
Net Revenue from Operations 4,00,000 Current Assets 1,00,000
Opening Stock 10,000 Prepaid Expenses 3,000
Closing Stock Rs.3000 less than Current Liabilities 60,000
Opening Stock
Net Purchases 80% of Net Revenue 9% Debentures 4,00,000
from Operations
Direct Expenses 20,000
Long-term Loan from Bank 1,50,000
Equity Share Capital 8,00,000
8% Preference Share 3,00,000
Capital
Answer-Liquid Ratio-1.5:1, Gross Profit Ratio-14.25%, Debt-equity Ratio-0.5:1
223. Calculate Return on Investment and Debt-equity ratio from the following information:
Net Profit after Interest & Tax Rs.3,00,000
10% Debentures Rs.5,00,000
Tax Rate 40%
Capital Employed Rs.40,00,000
Answer-Return on Investments-13.75%, Debt-equity Ratio-0.14:1
224. From the given information, Calculate Stock Turnover Ratio:
Sales Rs.4,00,000; Gross Profit 25% on Cost; Opening Stock was 1/3rd of the value of closing stock
and closing stock was 30% of sales.
(b) A business has Current Ratio of 3:1 and Quick Ratio of 1.5:1. If the Working Capital is
Rs.2,00,000, calculate the Total Current Assets and Stock.
Answer-Stock Turnover Ratio- 4 Times, (b) Total Current Assets-3,00,000, Stock-1,50,000
225. Following particulars are given to you:
Rs.
Revenue from Operations
Cash 12,12,000
Credit 4,38,000 16,50,000
Less: Purchases 12,80,000
Changes in Inventories
(Opening Inventory – Closing Inventory) (40,000 – 50,000) (-) 10,000
Manufacturing Expenses 1,30,000 14,00,000
Gross Profit 2,50,000

BALANCE SHEET
As at 31st March, 2012
Particulars Note No. Amount
I. EQUITY AND LIABILITIES : Rs.
(1) Shareholder’s Funds :
(a) Share Capital 4,00,000
(b) Reserve and Surplus 2,00,000
(2) Non-Current Liabilities :
Long-term Borrowings 1 1,00,000
(3) Current Liabilities :
(a) Short term Borrowings 10,000
(b) Trade Payables 55,000
(c) Other Current Liabilities 5,000

‘Mangal Prabhat’ 39, Shree Ram Colony, Sector 2, Vidyadhar Nagar, Jaipur | Ph.: 0141-2232667 P a g e | 45
Accountancy COMPILED BY: CA. AKSHAY BADAYA (+91 9414775218)
(d) Short term Provision 30,000
TOTAL 8,00,000
II. ASSETS :
(1) Non-Current Assets :
(a) Fixed Assets 6,50,000
(2) Current Assets :
(a) Inventory 50,000
(b) Trade Receivables 30,000
(c) Cash & Cash Equivalents 60,000
(d) Other Current Assets 2 10,000
TOTAL 8,00,000
Notes :
(1) Long-term Borrowings : Rs.
12% Debentures 1,00,000

(2) Other Current Assets :

Prepaid Expenses 10,000
Calculate the following ratios :-
(i) Working Capital Turnover Ratio; (ii) Inventory Turnover Ratio; (iii) Trade Receivables Turnover
Ratio; (iv) Proprietary Ratio; (v) Quick Ratio and (vi) Total Assets to Debt Ratio.
Ans. (i) 33 Times; (ii) 31.11 Times; (iii) 14.6 Times (iv) 75%; (v) 0.9 : 1; and (vi) 8 : 1
Notes :
(1) Proprietary Ratio = X 100.
(2) Total Assets to Debt Ratio = =
226. With the help of the given information, calculate any three of the following ratios : (i) Operating
ratio, (ii) Quick ratio, (iii) Working capital turnover ratio, and (iv) Debt equity ratio.
Information : Equity Share Capital Rs. 50,000; 12% Preference Share Capital Rs. 40,000; 12%
Debentures Rs. 30,000; General Reserve Rs. 40,000; Revenue from Operations Rs. 3,00,000; Opening
Inventory Rs. 20,000; Purchases Rs. 1,40,000; Wages Rs. 30,000; Closing Inventory Rs. 40,000; Selling
and distribution expenses Rs. 18,000; Other Current Asses Rs. 1,00,000 and Current Liabilities Rs.
60,000.
Ans. (i) 56%; (ii) 1.67 : 1; (iii) 3.75 Times; (iv) 0.23 : 1
Hint : Working Capital = Closing Inventory + Other Current Assets – Current Liabilities
227. From the following information :
Rs.
Opening Inventory 5,00,000
Fixed Assets 5,25,000
Cost of Revenue from Operations 18,00,000
Net Revenue from Operations 30,00,000
Operating expenses 4,80,000
Interest Charges 1,80,000
Current liabilities 6,00,000
Current Assets 9,75,000
Closing inventory 7,00,000
Calculate any three of the following :
(a) Operating ratio
(b) Inventory turnover ratio
(c) Return on Capital Employed, and
(d) Liquid Ratio.

‘Mangal Prabhat’ 39, Shree Ram Colony, Sector 2, Vidyadhar Nagar, Jaipur | Ph.: 0141-2232667 P a g e | 46
Accountancy COMPILED BY: CA. AKSHAY BADAYA (+91 9414775218)
Ans. Operating Ratio 76%; Inventory Turnover Ratio 3 Times; Return on Capital Employed 80%;
and Liquid 0.46 : 1
Hint : Capital Employed = Fixed Assets + Current Assets – Current Liabilities.
228. From the information given below calculate the following ratios :
(a) Quick Ratio
(b) Inventory Turnover Ratio
(c) Debt-Equity Ratio
Information
Current Assets Rs. 5,00,000; Opening Inventory Rs. 50,000; Closing Inventory Rs. 1,50,000; Cost of
Revenue from Operations Rs. 12,00,000; Gross Profit Rs. 2,00,000; Indirect expenses Rs. 20,000;
Equity Share Capital Rs. 7,00,000; 10% Preference Share Capital Rs. 3,00,000; 12% Debentures Rs.
2,00,000; Current Liabilities Rs. 2,00,000; General Reserve Rs. 1,00,000.
Ans.
(a) Quick Ratio : = 1.75 : 1
(b) Inventory Turnover Ratio : 12 Times.
(c) Debt- Equity Ratio : = = 0.159 : 1
Hint : Shareholder’s Funds = Equity Share Capital + Pref. Share Capital + General Reserve + Net
Profit (i.e. G.P. – Indirect Exp. – Interest on Debentures)
= 7,00,000 + 3,00,000 + 1,00,000 + 1,56,000
(i.e. 2,00,000 – 20,000 – 24,000)
= 12,56,000.
229. On the basis of information given below, calculate any two of the following ratios :
(a) Gross Profit Ratio;
(b) Debt – Equity Ratio, and
(c) Working Capital Turnover Ratio.
Information :
Net Revenue from Operations 3,75,000 Current Assets 4,25,000
Cost of Revenue from 2,50,000 Equity Share Capital 1,90,000
Operations
Current Liabilities 1,20,000 Debentures 75,000
Loan 60,000
Ans. Gross Profit Ratio 33 %; Debt-Equity Ratio 0.71 : 1; Working Capital Turnover Ratio 1.23
times.
230. On the basis of the following information, calculate any two of the following ratios :
(a) Operating Ratio
(b) Liquid Ratio
(c) Proprietary Ratio
Information :
Cash Revenue from Operations Rs. 4,00,000; Credit Revenue from Operations Rs. 2,75,000; Revenue
from Operations Returns Rs. 27,000; Cost of Revenue from Operations Rs. 3,90,000; Selling and
Distribution Expenses Rs. 7,000; Administration Expenses Rs. 3,000; Current Liabilities Rs. 1,95,000;
Current Assets Rs., 3,94,000; Closing Inventory Rs. 23,000; Equity Share Capital Rs. 4,37,000; 6%
Preference Share Capital Rs. 1,74,000; Fixed Assets Rs. 4,30,000.
Ans. (a) 61.73%; (b) 1.9 : 1; (c) 74.15%.
231. The current ratio of a company is 2 : 1. State which of the following would improve, reduce or not
change the ratio :
(a) Repayment of a current liability.

‘Mangal Prabhat’ 39, Shree Ram Colony, Sector 2, Vidyadhar Nagar, Jaipur | Ph.: 0141-2232667 P a g e | 47
Accountancy COMPILED BY: CA. AKSHAY BADAYA (+91 9414775218)
(b)
Purchasing goods on credit.
(c)
Sale of motor vehicle at a profit of 10%.
(d)
Sale of goods at a profit of 10%.
(e)
Payment of dividend.
(f)
Repayment of Long term Borrowings.
Ans. (i) Improve; (ii) Reduce; (iii) Improve; (iv) Improve; (v) Improve, and (vi) Reduce.
232. From the following information calculate any two of the following ratio:
(a) Current Ratio
(b) Debt Equity Ratio
(c) Operating Ratio
Revenue from Operations Rs. 1,00,000; Cost of Revenue from Operations was 80% of Revenue
from Operations; Equity Share Capital Rs. 7,00,000; General Reserve Rs. 3,00,000; Operating
Expenses Rs. 10,000; Rs. 10,000; Quick Assets Rs. 6,00,000; 9% Debentures Rs. 5,00,000; Closing
Inventory Rs. 50,000; Prepaid Expenses Rs. 10,000 and Current Liabilities Rs. 4,00,000.
Ans. Current Ratio 1.65 : 1 ; Debt Equity Ratio 0.5 : 1; Operating Ratio 90%.
233. From the following information , calculate any two of the following ratios:
(a) Operating Ratio
(b) Inventory Turnover Ratio
(c) Proprietary Ratio
Information :
Cash Revenue from Operations : Rs. 10,00,000
Credit Revenue from Operations : 120% of Cash Revenue from Operations
Operating Expenses : 10% of Total Revenue from Operations
Ratio of Gross Profit : 40%
Opening Inventory : Rs. 1,50,000
Closing Inventory : Rs. 20,000 more than Opening Inventory
Current Assets : Rs. 3,00,000
Current Liabilities : Rs. 2,00,000
Share Capital : Rs. 6,00,000
Fixed Assets : Rs. 5,00,000
Ans. (i) 70%; (ii) 8.25 times; (iii) 75%
234. From the following information, calculate any two of the following ratios:
(a) Liquid Ratio
(b) Gross Profit Ratio
(c) Debt-Equity Ratio
Information :
Net Revenue from Operations : Rs. 4,00,000
Opening Inventory : Rs. 10,000
Closing Inventory : Rs. 3,000 less than Opening Inventory
Net Purchases : 80% of Net Revenue from Operations
Direct Expenses : Rs. 20,000
Current Assets : Rs. 1,00,000
Prepaid Expenses : Rs. 3,000
Current Liabilities : Rs. 60,000
9% Debentures : Rs. 4,00,000
Long term loan from Bank : Rs. 1,50,000
Equity Share Capital : Rs. 8,00,000
8% Preference Share Capital : Rs. 3,00,000
Ans. (i) Liquid Ratio 1.5 : 1; (ii) Gross Profit Ratio 14.25% ; (iii) Debt Equity Ratio 0.5 :1.

‘Mangal Prabhat’ 39, Shree Ram Colony, Sector 2, Vidyadhar Nagar, Jaipur | Ph.: 0141-2232667 P a g e | 48
Accountancy COMPILED BY: CA. AKSHAY BADAYA (+91 9414775218)
Hint : Liquid Assets = Current Assets – Closing Inventory – Prepaid Exp.
= 1,00,000 -7,000 – 3,000
= Rs. 90,000
235. From the following information, calculate any two of the following ratios:
(a) Debt-Equity Ratio;
(b) Working Capital Turnover Ratio;
(c) Return on Investment.
Information :
Equity Share Capital Rs. 9,00,000, General Reserve Rs. 1,00,000; Statement of Profit and Loss Balance
After Tax and Interest Rs. 3,00,000; 12% Debentures Rs. 4,00,000; Trade Payables Rs. 3,00,000; Land
and Building Rs. 13,00,000; Furniture Rs. 3,00,000; Trade Receivables Rs. 2,90,000; Cash Rs. 1,10,000.
Revenue from Operations for the year ended 31.3.2011 was Rs. 3,00,000 and Tax paid 50%.
Ans. (a) 0.31 : 1, (b) 3 Times, (c) 38.12%
236. Compute ‘Trade Receivables Turnover Ratio’ from the following information :
Total Revenue from Operations Rs. 5,20,000, Cash Revenue from Operations 60% of the Credit
Revenue from Operations, Closing Trade Receivables Rs. 80,000, Opening Trade Receivables are ¾ of
Closing Trade Receivables.
Ans. Trade Receivables Turnover Ratio : 4.64 Times.
Hint : Credit Revenue from Operations : X Rs. 5,20,000.
237. Calculate ‘Debt Equity Ratio’ from the following information:
Total Assets Rs. 3,50,000; Total Debt Rs. 2,50,000 and Current Liabilities Rs. 80,000.
Ans. Debt Equity Ratio 1.7 : 1
238. From the following information related to Naveen Ltd. Calculate (a) Return on Investment and (b)
Total Assets to Debt Ratio:
Information : Fixed Assets Rs. 75,00,000; Current Assets Rs. 40,00,000; Current Liabilities Rs.
27,00,000; 12% Debentures Rs. 80,00,000 and Net Profit before Interest, Tax and Dividend Rs.
14,50,000.
Ans. (a) Return on Investment 16.48%
(b) Total Assets to Debt Ratio 1.44 : 1

‘Mangal Prabhat’ 39, Shree Ram Colony, Sector 2, Vidyadhar Nagar, Jaipur | Ph.: 0141-2232667 P a g e | 49

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Accountancy COMPILED BY: CA.

AKSHAY BADAYA (+91 9414775218)

Note : 1. Trade Receivables : Rs.

(iii) Proprietary Ratio = X 100 = 52.47%

91. Cost of Revenue from Operations = Rs. 3,00,000

93. You are given the following information :

Answer-Debtors Turnover Ratio-4.64 times

IV. Less: Expenses

216. The following information is provided:

(2) Other Current Assets :

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