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Page No 4.100:

Answer:

(i) Current RatioCurrent Assets=Total Assets-Fixed Assets-Non-Current Investment - Long term Loans and Advances                       =8,00,000-3,00,000-50,000-50,000=Rs 4,00,000Current Liabilities=Total Debt - Non-Current Liabilities                             =6,00,000-2,00,000-2,00,000=Rs 2,00,000Current  Ratio=Current  AssetsCurrent  Liabilities                     =4,00,0002,00,000=2:1(ii) ​ Quick Ratio Quick Assets=Current Assets-Stock-Prepaid Expenses                   =4,00,000-95,0005,000=Rs 3,00,000Quick  Ratio=Quick  AssetsCurrent  Liabilities                     =3,00,0002,00,000=1.5:1

Page No 4.100:

Answer:

Debt Equity Ratio=DebtEquity
 

Equity  =  Share Capital + Reserve and Surplus
   =  5, 00,000 + 2, 00,000 + 3, 00,000
   =  Rs 10, 00,000
 
Debt  =  Long Term Borrowings + Long Term Provision
   =  7, 00,000 + 50,000
   =  Rs 7, 50,000
   =  7,50,00010,00,000
   = 0.75:1

Page No 4.100:

Answer:

Debt  =  Total Debt – Current Liabilities
   =  1, 80,000 – 20,000
   =  Rs. 1, 60,000
 
Equity =  Total Assets – Current Liabilities – Non Current Liabilities
   =  2, 60,000 – 20,000 – 1, 60,000
   =  Rs. 80,000

Debt Equity Ratio=DebtEquity=1, 60, 00080, 000=2: 1

Page No 4.100:

Answer:

Debt Equity Ratio=DebtEquity
 

Debt  =  Long Term Borrowings + Long Term Provision
   =   14, 00,000 + 1, 00,000
   =  Rs 15, 00,000
 
Equity  =  Share Capital + Reserve and Surplus
   =  8, 00,000 + 2, 00,000
   =  Rs 10, 00,000
Debt Equity Ratio  =  15,00,00010,00,000
   =  1.5: 1

Page No 4.100:

Answer:

Let’s take Debt = Rs. 50,000 and Equity = Rs. 1, 00,000

1. Issue of Shares say Rs 20,000, So


2. Cash received from Debtors Say Rs. 20,000, So

3. Redemption of Debentures Say Rs. 20,000, So

4. Purchase goods on credit sale Say Rs. 20,000 

Page No 4.100:

Answer:

Debt=Long Term Borrowings+Long Term Provisions        = 4,20,000+1,40,000 = Rs 5,60,000Equity=Total Assets - Total Debts           = (8,40,000 -1,40,000+14,000+56,000+3,50,000) - (4,20,000 -1,40,000 -2,80,000)= Rs 2,80,000Debt  to  Equity  Ratio=DebtEquity                                  =5,60,0002,80,000=2:1

Page No 4.100:

Answer:

Debt Equity Ratio=DebtEquity
 

Debt =  Long Term Borrowings + Long Term Provision
  =  Rs 4, 50,000 
 
Equity  =  Share Capital + Reserve and Surplus
   =  2, 50,000 + 50,000
   =  Rs 3, 00,000
Debt Equity Ratio =  4,50,0003,00,000
  =  1.5: 1



Page No 4.101:

Answer:

Debt Equity Ratio=DebtEquity
 

Debt  =  Long Term Borrowings + Long Term Provision
   =  2,00,000 + 50,000
   =  Rs 2,50,000 
 
Equity  =  Share Capital + Reserve and Surplus
   =  6, 00,000 – 1, 00,000
   =  Rs 5,00,000
Debt Equity Ratio = 2,50,0005,00,000
  =  0.5: 1

Page No 4.101:

Answer:


 

Shareholder’s Fund  =  Share Capital + Reserve and Surplus
   =  4, 50,000 + 75,000
   =  Rs. 5, 25,000
Proprietary Ratio  =  5,25,0007,50,000
   =  0.7: 1



Page No 4.102:

Answer:

Debt to Equity Ratio=DebtEquity                                  =8,00,0004,00,000=2:1Debt=Long Term Borrowings+Long Term Provision        =5,00,000+3,00,000 = Rs 8,00,000

Proprietary Ratio=Shareholder's FundsTotal Assets×100                            =4,00,00016,00,000×100=25%Shareholders' Funds/Equity=Non-Current Assets + Working CapitalNon-Current Liabilities                                = 8,00,000 + 4,00,000  8,00,000 = Rs 4,00,000Working Capital = 8,00,000  4,00,000 = 4,00,000

Page No 4.102:

Answer:

Debt to Total Assets Ratio=DebtTotalAssets                                              =10,00,00025,00,000=0.4:1

Debt  =  Long Term Borrowings + Long Term Provision
   =  8, 00,000 + 2, 00,000
   =  Rs 10, 00,000

Page No 4.102:

Answer:

Debts to Total Assets Ratio=DebtTotalAssets                                                =12,00,00044,00,000=0.27:1
 

Debt  =  Total Debt + Short Term Borrowings – Other Current Liabilities
   =  20, 00,000 - 4, 00,000 -4, 00, 000
  =  Rs 12, 00,000 

Total Assets = Total Liabilities = 24, 00,000 + 20, 00,000 = Rs. 44, 00,000

Page No 4.102:

Answer:

Debt to Total Assets Ratio=DebtTotal Assets                                 =24,00,00042,00,000=0.57:1Total Assets=Shareholder's Funds + Total Debt                   =6,00,000 + 36,00,000=Rs 42,00,000Debt = Total  Debt Current  Liabilities = 36,00,000  12,00,000 = Rs 24,00,000Current  Liabilities = Current  Asset Working  Capital = 15,00,000  3,00,000 = Rs 12,00,000

Page No 4.102:

Answer:

Debt to Total Assets Ratio=DebtTotal Assets                                 =12,00,00024,00,000=0.5:1Debt=Long term Debt + Long term Provision        =9,00,000 + 3,00,000=Rs 12,00,000Total Assets=18,00,000  3,00,000 + 30,000 + 1,20,000 + 7,50,000=Rs 24,00,000

Page No 4.102:

Answer:

Debt  =  Total Debt - Current Liabilities
   =  15, 00,000 – (4, 00,000 + 50, 000 + 10,000 + 1, 00,000)
   =  15, 00,000 - 5, 60,000
   =  Rs 9, 40,000
Debt to Total Assets Ratio=DebtTotal Assets                                              =9,40,00020,00,000=0.47:1



Page No 4.103:

Answer:

Debt to Total Assets Ratio=DebtTotal Assets                                              =2,00,00011,00,000=0.18:1

Page No 4.103:

Answer:


 

Shareholder’s Fund  =  Share Capital + Reserve and Surplus
  =  7, 00,000 + 2, 50,000 + 3, 00,000 + 2, 50,000
  =  Rs. 15, 00,000
 
Total Assets  =  Fixed Assets + Investment + Current Assets
  =  35, 00,000 + 2, 00,000 + 8, 00,000
  =  Rs. 45, 00,000
Proprietory Ratio =  15,00,00045,00,000
  =  0.33: 1

Debt to Total Assets Ratio=DebtTotal Assets                                              =25,00,00045,00,000=0.55:1
 
Debt  =  Long Term Borrowings + Long Term Provision
  =  20, 00,000 + 5, 00,000
  =  Rs.25, 00,000

Page No 4.103:

Answer:

Shareholder’s Fund  =  Share Capital + Reserve and Surplus
   =  90,000 + 60,000 + 30,000 + 60,000
   =  Rs.2, 40,000
 
Total Assets  =  Fixed Assets + Investment + Current Assets
   =  6, 00,000 + 60,000 + 3, 00,000
   =  Rs. 9, 60,000
 
Debt  =  Long Term Borrowings + Long Term Provision
   =  Rs 4, 80,000 





Debt to Total Assets Ratio=DebtTotalAssets                                              =4,80,0009,60,000=0.5:1



Page No 4.104:

Answer:

Debt to Equity Ratio=DebtEquity                                 =16,50,0006,00,00013,50,000=0.78:1Equity=Total Assets Total Debts           =30,00,000 16,50,000=Rs 13,50,000

Debt to Total Assets Ratio=DebtTotal Assets                                          =16,50,0006,00,00030,00,000=0.35:1

Proprietary Ratio=Shareholder's FundsTotal Assets×100                            =13,50,00030,00,000×100=45%

Page No 4.104:

Answer:

Shareholder’s Fund  =  Share Capital + Reserve and Surplus
   =  6, 00,000 + 1, 50,000
   =  Rs.7, 50,000
 
Debt  =  Long Term Borrowings + Long Term Provision
   =  Rs 1, 00,000 

 
Debt to Total Assets Ratio=DebtTotal Assets                                             =1,00,00010,00,000=0.1:1

Page No 4.104:

Answer:

Page No 4.104:

Answer:

Profit before Interest & Tax  =  1, 70,000 + 30,000 + 40,000
  =  Rs 2, 40,000
 

Page No 4.104:

Answer:

Profit before Interest & Tax  =  75,000 + 9,000 + 5,000 + 5,000 (Interest on Debenture)
   =  Rs 94,000



Page No 4.105:

Answer:

Interest Coverage Ratio = Profit before Interest and TaxInterest on Long-term DebtsInterest Coverage Ratio = 7,20,000*1,00,000 = 7.2 Times*Profit after Interest but before Tax =6,20,000Add: Interest                            =1,00,000 Profit before Interest and Tax       = Rs 7,20,000

Page No 4.105:

Answer:

Page No 4.105:

Answer:



Page No 4.106:

Answer:

Page No 4.106:

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Page No 4.106:

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Page No 4.106:

Answer:

Cost of Goods Sold  =  Rs. 5,00,000
Gross Profit  =  5,00,000 × 20%
   =  Rs. 1,00,000
 
Sales  =  Cost of Goods Sold + Gross Profit
   =  5,00,000 + 1,00,000
   =  Rs. 6,00,000
 
Cash Sales  =  20% of 6,00,000 = Rs. 1,20,000
   =  6,00,000 – 1,20,000
   =  Rs. 4,80,000

Page No 4.106:

Answer:

Trade Receivables Turnover Ratio=Net Credit Revenue From OperationsAverage Trade Receivables                                                      = 6,00,0001,50,000=4 timesNet Credit revenue From Operations=Collection from Trade Receivables + Discount Allowed + Closing Trade Receivables Opening Trade Receivables                                                           = 5,34,000 + 6,000 + 1,80,000 1,20,000 = Rs 6,00,000Average Trade Receivables=1,20,000+1,80,0002=Rs 1,50,000

Page No 4.106:

Answer:

Page No 4.106:

Answer:

Trade Receivable Turnover Ratio =Credit Revenue from OperationsAverage Trade Receivables                                                    3 =3,00,000Average Trade ReceivablesAverage Trade Receivables = 3,00,0003=Rs 1,00,000Average Trade Receivables=Opening Trade Receivables+Closing  Trade Receivables2                            1,00,000 =x+4x2So, x would be Rs 40,000 Opening receivables would be Rs 40,000 and, Closing Receivables would be Rs 1,60,000(40,000×4)Revenue from Operations=3,00,000+2575×3,00,000=Rs 4,00,000Credit Revenue from Operations=Total Revenue from OperationsCash Revenue from Operations                                                   x=4,00,000-13xCredit Revenue from Operations=Rs 3,00,000

Page No 4.106:

Answer:

Trade Receivables Turnover Ratio=Net Credit Revenue From OperationsAverage Trade Receivables                                                      3=3,00,000Average Trade ReceivablesAverage Trade Receivables=Rs 1,00,0001,00,000=13×Closing Trade Receivables+Closing Trade Receivables2Closing Trade Receivables=2,00,000×34=Rs 1,50,000Opening Trade Receivables=1,50,000×13=Rs 50,000Note:Revenue From Operations=Cost of revenue From Operations + Gross Profit                                          = 3,00,000 + 1,00,000=Rs 4,00,000Gross Profit = 3,00,000×2575=Rs 1,00,000Revenue From Operations=Credit revenue From Operations+Cash revenue From Operations 4,00,000 = Credit revenue From Operations + 13×Credit revenue From OperationsCredit revenue From Operations=4,00,000×34=Rs 3,00,000



Page No 4.107:

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Page No 4.107:

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Page No 4.107:

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Page No 4.107:

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Page No 4.107:

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Page No 4.107:

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Trade Payables Turnover Ratio=Net Credit PurchasesAverage Trade Payables                                               3=3,00,000Average Trade PayablesAverage Trade Payables=Rs 1,00,0001,00,000=Opening Trade Payables+3 Opening Trade Payables2Opening Trade Payables=2,00,000×14=Rs 50,000Closing Trade Payables=50,000×3=Rs 1,50,000Note:Cost of Revenue From Operations= Revenue From Operations Gross Profit                                          = 4,00,0001,00,000=Rs 3,00,000Gross Profit = 4,00,000×25100=Rs 1,00,000Cost Revenue From Operations=Opening Inventory+Purchases-Closing Inventory                      3,00,000 = 5,00,000 + Purchases6,00,000 = Rs 4,00,000Cash Purchases = 4,00,000×14=Rs 1,00,000Purchases=Cash Purchases+Credit Purchases4,00,000=1,00,000+Credit PurchasesCredit Purchases=Rs 3,00,000

Page No 4.107:

Answer:

Trade Payables Turnover Ratio=Net Credit PurchasesAverage Trade Payables                                               4=3,20,000Average Trade PayablesAverage Trade Payables=Rs 80,00080,000=Opening Trade Payables+4 Opening Trade Payables2Opening Trade Payables=1,60,000×15=Rs 32,000Closing Trade Payables=32,000×4=Rs 1,28,000Note:Cost of Revenue From Operations= Revenue From Operations Gross Profit                                          = 4,00,000 1,00,000=Rs 3,00,000Gross Profit = 4,00,000×25100=Rs 1,00,000Cost Revenue From Operations=Opening Inventory+PurchasesClosing Inventory                      3,00,000 = 5,00,000 + Purchases 6,00,000 = Rs 4,00,000Purchases=Cash Purchases+Credit Purchases4,00,000=14×Credit Purchases+Credit PurchasesCredit Purchases=Rs 3,20,000

Page No 4.107:

Answer:

Working Capital Turnover Ratio = Revenue from OperationsWorking CapitalWorking Capital Turnover Ratio = 21,00,0003,50,000 = 6 TimesRevenue from Operations = Sales - Sales ReturnRevenue from Operations = 23,00,000 - 2,00,000 = Rs 21,00,000Working Capital = Current Assets - Current LiabilitiesWorking Capital = 6,00,000 - 2,50,000 = Rs 3,50,000Current Assets = Marketable Securities + Inventory + Sundry Debtors + Bills Receivable + Cash at Bank + Cash in HandCurrent Assets = 1,50,000 + 50,000 + 2,00,000 +50,000 +1,00,000 +50,000 = Rs 6,00,000Current Liabilities = Bills Payable + Sundry Creditors + Provision for TaxCurrent Liabilities = 30,000 +2,00,000 + 20,000 = Rs 2,50,000



Page No 4.108:

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Page No 4.109:

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Page No 4.109:

Answer:

Inventory Turnover Ratio=Cost of Revenue From OperationsAverage Inventory                                                      =9,00,0001,50,000=6 timesAverage Inventory=1,00,0000+2,00,0002=Rs 1,50,000Cost of Revenue From Operations= Revenue From Operations Gross Profit                                          =11,25,000 2,25,000=Rs 9,00,000Gross Profit=11,25,000×25125=Rs 2,25,000

Page No 4.109:

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Page No 4.109:

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Page No 4.109:

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Page No 4.109:

Answer:

Let Cost of Goods Sold be = x

Cost of Goods Sold = x = Rs 3,84,000

Cost of Goods Sold = Opening Inventory (Stock) + Purchases − Closing Inventory (Stock)

3,84,000 = Opening Inventory + 3,60,000 − 68,000

Opening Inventory = 3,84,000 − 2,92,000 = Rs 92,000

Page No 4.109:

Answer:

Sales = 2,00,000

Gross Profit = 25% on Sales

Cost of Goods Sold = Total Sales − Gross Profit

= 2,00,000 − 50,000 = 1,50,000

Let Opening Inventory = x

Closing Inventory = x + 4,000

Opening Inventory = x = Rs 28,000

Closing Inventory = x + 4,000 = 28,000 + 4,000 = Rs 32,000



Page No 4.110:

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Page No 4.110:

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Page No 4.110:

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Inventory Turnover Ratio=Cost of Revenue From OperationsAverage Inventory                                      8=Cost of Revenue From Operations48,000Cost of Revenue From Operations=Rs 3,84,000Cost of Revenue From Operations= Revenue From Operations Gross Profit                                       3,84,000 = Revenue From Operations 96,000Revenue From Operations=Rs 4,80,000Gross Profit=3,84,000×25100=Rs96,000Average Inventory=60,0000+36,0002=Rs 48,000Gross Profit Ratio =Gross ProfitRevenue From Operations×100                            =96,0004,80,000×100=20%

Page No 4.110:

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Page No 4.111:

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Page No 4.111:

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Page No 4.111:

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Given:Operating Cost=Rs 3,40,000Operating Expenses=Rs 40,000Gross Profit Ratio=25%Find out: Operating RatioOperating Cost=Cost of Revenue from Operations+Operating Expenses3,40,000=Cost of Revenue from Operations+40,000Cost of Revenue from Operations=Rs 3,00,000Gross Profit=14th of sales=13rd of costGross Profit=13×3,00,000=Rs 1,00,000Gross Profit Ratio=Gross ProfitNet Sales×10025=1,00,000Net Sales×100Net Sales=Rs 4,00,000Operating Ratio=Operating CostNet Sales×100                            =3,40,0004,00,000×100=85%

Page No 4.111:

Answer:

Operating Ratio=Cost of Revenue from Operations+Operating ExpensesRevenue from Operations×100                          =3,60,000+45,0004,50,000×100=90%Cost of Revenue from Operations=Revenue from OperationsGross Profit                           =4,50,000 - 90,000=Rs 3,60,000Gross Profit = 4,50,000×25125% = Rs 90,000                       

Page No 4.111:

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Page No 4.112:

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Page No 4.112:

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Earning Per Share=Earning Available to Equity ShareholdersNumber of Equity Shares                                   =2,70,00027,00080,000=Rs 3.04 per sharePrice-Earning Ratio = Market Price Per ShareEarning Per Share=403.04=13.16 timesNote : Dividend  on  Preference  Shares = Rs  27,000  ( 9% of  3,00,000)

Page No 4.112:

Answer:

Net Profit after Tax (as per Statement of Profit and Loss) = 45,000

Provision for Taxation = 10,000

Net Profit before Interest and Tax = 45,000 + 10,000 = 55,000

Capital Employed = Share Capital + Reserves and Surplus + Long-term Borrowings

= 2,00,000 + 1,00,000 + 1,00,000 = 4,00,000



Page No 4.113:

Answer:

Net Fixed Assets = Fixed Assets (at cost) − Accumulated Depreciation

= 22,50,000 − 2,50,000 = 20,00,000

Capital Employed = Net Fixed Assets + Current Assets − Current Liabilities

= 20,00,000 + 12,00,000 − 4,00,000

= 28,00,000

Interest on 10% Debentures = 10% of 10,00,000 = 1,00,000

Let Profit before Tax be = x

Profit after Tax = Profit Before Tax − Tax

Tax Rate = 50%

∴ Tax = 0.5 x

x − 0.5 x = 6,50,000

x = 13,00,000

Net Profit before Tax = x = 13,00,000

Profit before Interest and Tax = Profit before Tax + Interest on Long-term Debt

= 13,00,000 + 1,00,000

= 14,00,000

Page No 4.113:

Answer:

Net Profit before Interest and Tax = 2,50,000

Capital Employed = 10,00,000

Page No 4.113:

Answer:

Net Profit before Interest and Tax = 6,00,000

Capital Employed = Net Fixed Assets + Net Working Capital

= 20,00,000 + 10,00,000 = 30,00,000

Page No 4.113:

Answer:

Net Profit before Interest and Tax = 4,00,000

Capital Employed = 15% long-term Debt + Shareholders’ Funds

= 8,00,000 + 4,00,000 = 12,00,000

Page No 4.113:

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Page No 4.113:

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Page No 4.113:

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Page No 4.113:

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Inventory Turnover Ratio=Cost of Revenue From OperationsAverage Inventory                                                      4=2,25,000Average InventoryAverage Inventory=Rs 56,250Average Inventory=Opening  Inventory+Closing Inventory256,250=Opening  Inventory+(Opening  Inventory+20,000)2Opening  Inventory=Rs 46,250Closing Inventory = Rs 66,250Quick Ratio = Current Assets Closing InventoryCurrent Liabilities0.75=Current Assets66,25040,000Current Assets=Rs 96,250



Page No 4.114:

Answer:

Let Debt to be Rs. 2, 00,000 and Equity = Rs. 1, 00,000

  a) Sale of Land book value Rs. 5,00,000, So

 
  
  b) Issue of Share for Purchase of Plant& Machinery Rs. 10,00,000, So
  

  c) Issue of Preference Shares for Payment of Redemption say Rs. 50,000, So
 

Page No 4.114:

Answer:

Debt  =  Total Debts – Current Liabilities
   =  10, 00,000 – 5, 00,000
   =  Rs. 5, 00,000
 
Equity  =  Total Assets – Current Liabilities – Total Debts
   =  12, 50,000 – 10,00,0000
   =  Rs. 2, 50,000

Page No 4.114:

Answer:

Debt  =  Long Term Borrowings + Long Term Provision
   =  1, 10,000 + 20,000
   =  Rs 1, 30,000
 
Equity  =  Share Capital + Reserve and Surplus
   =  5, 00,000 + 1, 00,000 + 40,000
   =  Rs 6, 40,000

Page No 4.114:

Answer:


 

Debt  =  Long Term Borrowings + Long Term Provision
   =  2, 00,000 + 50,000
   =  Rs 2, 50,000
 
Equity  =  Share Capital + Reserve and Surplus
   =  10, 00,000 + 2, 40,000
   =  Rs 12, 40,000



Page No 4.115:

Answer:


 

Debt  =  Long Term Borrowings + Long Term Provision
   =  Rs 30, 00,000 
 
Equity  =  Share Capital + Reserve and Surplus
   =  5, 00,000 + 15, 00,000 + 1, 00,000 + 4, 00,000
   =  Rs 25, 00,000
 

Page No 4.115:

Answer:

(i) Debt to Equity Ratio=DebtEquity=3,00,00012,00,000=1:4

(ii) Proprietary Ratio=Shareholders' FundsTotal Assets                                   =12,00,00018,00,000×100=66.67%

(iii) Debt to Total Assets Ratio=DebtTotal Assets                                             =3,00,00018,00,00=0.17:1
 

Debt  =  Long Term Borrowings + Long Term Provision
   =  2, 60,000 + 40,000
   =  Rs 3, 00,000



Page No 4.116:

Answer:

Debt to Equity Ratio=DebtEquity                                 =2,00,0007,00,000=0.29:1Equity=Equity Share Capital+Reserve & Surplus        =5,50,000 + 50,000 + 1,00,000 = Rs 7,00,000

Working Capital Turnover Ratio=Revenue from OperationsWorking Capital                                 = 15,00,0001,00,000=15 timesWorking capital=(1,45,0000+55,0000)1,00,000=Rs 1,00,000

Return on Investment=Profit Before Interest & TaxCapital Employed×100                                 =2,18,0009,00,000×100=24.22%Capital Employed=Non-Current Assets+Current AssetsCurrent Liabilities                              = 6,50,000 + 1,50,000 + 2,00,000 1,00,000 = Rs 9,00,000Profit  before  Tax  and  Interest = Profit after Tax + Tax + Interest = 1,00,000+ 1,00,000 + 18,000 = Rs 2,18,000

Page No 4.116:

Answer:

Operating Ratio=Cost of Revenue from Operations+Operating ExpensesRevenue from Operations×100                                   =13,20,000+2,20,00022,00,000×100=70%Cost of Revenue from Operations=Revenue from OperationsGross Profit                           =10,00,000 +12,00,0008,80,000=Rs 13,20,000Gross Profit = 22,00,000×40%=8,80,000

Inventory Turnover Ratio=Cost of Revenue From OperationsAverage Inventory                                                      =13,20,0001,60,000=8.25 timesAverage Inventory=1,50,000+1,70,0002=Rs 1,60,000                     

Proprietary Ratio=Shareholder's FundsTotal Assets×100                            =6,00,0008,00,000×100=75%Shareholder's Funds/Equity=Non-Current Assets + Working CapitalNon-Current Liabilities                                = 5,00,000 + 1,00,000 = Rs 6,00,000

Page No 4.116:

Answer:

Page No 4.116:

Answer:

Page No 4.116:

Answer:

Page No 4.116:

Answer:

(A)


(B)

Page No 4.116:

Answer:



Page No 4.117:

Answer:

Page No 4.117:

Answer:

Inventory Turnover Ratio (2015) = Cost of Revenue from OperationsAverage Stockor, Inventory Turnover Ratio (2015) = 42,00014,000 = 3 Times

Inventory Turnover Ratio (2016) = Cost of Revenue from OperationsAverage Stockor, Inventory Turnover Ratio (2016) = 50,00020,000 = 2.5 Times

Page No 4.117:

Answer:

Page No 4.117:

Answer:

Page No 4.117:

Answer:

Page No 4.117:

Answer:

Page No 4.117:

Answer:

Page No 4.117:

Answer:

Page No 4.117:

Answer:

(A)


(B)



Page No 4.118:

Answer:

Page No 4.118:

Answer:

Page No 4.118:

Answer:

Page No 4.118:

Answer:

Current Assets  =  Debtors + Prepaid Expenses + Cash + Marketable Securities + Inventory
   =  2, 00,000 + 20,000 + 60,000 + 40,000 + 80,000 
   =  Rs 4, 00,000
 
Current Liabilities  =  Bills Payables + Creditors + Expenses Payables
   =  40,000 + 80,000 + 80,000
   =  Rs 2, 00,000 

Page No 4.118:

Answer:

Page No 4.118:

Answer:

Page No 4.118:

Answer:

Page No 4.118:

Answer:

Return on Investment=Profit Before Interest & TaxCapital Employed×100                                 =14,50,00088,00,000=16.48%Capital Employed=Non-Current Assets+Current AssetsCurrent Liabilities        = 75,00,000 + 40,00,00027,00,000 = Rs 88,00,000

Debt to Total Asset Ratio = DebtTotalAssets                                                    =80,00,0001,15,00,000=0.6956:1Debt=12%Debentures =Rs  80,00,000TotalAssets  =  FixedAssets+CurrentAssets  =  75,00,000+40,00,000 =Rs 1,15,00,000

Page No 4.118:

Answer:

Return on Investment=Profit Before Interest & TaxCapital Employed×100                                 =  2,00,0006,40,000=31.25%Capital Employed=Shareholders' Funds + Long Term Debts        =2,40,000 + 4,00,000 = Rs 6,40,000Profit Before Interest & Tax=1,40,000+60,000=Rs 2,00,000

Page No 4.118:

Answer:

Return on Investment=Profit Before Interest & TaxCapital Employed×100                                 =11,00,00080,00,000=13.75%Profit Before Interest & Tax=6,00,000+4,00,000(6,00,000×4060)+1,00,000=Rs 11,00,000



Page No 4.119:

Answer:

Current Assets  =  Debtors + Stock + Cash
   =  10,000 + 15,000 + 15,000
   =  Rs. 40,000
 
Current Liabilities  =  Bills Payables + Creditors
   =  6,000 + 14,000
   =  Rs. 20,000

Page No 4.119:

Answer:

(A)


(B)

(C)

Page No 4.119:

Answer:

(A)


(B)
(C)

(D)

Debt to Total Assets Ratio=DebtTotalAssets=1,00,0003,50,000=0.29:1


(E)



Page No 4.120:

Answer:

(A)

(B)
(C)
(D)



Page No 4.121:

Answer:

(A)


(B)

(C)

Page No 4.121:

Answer:

(A)

(B)

Debts to Total Assets Ratio=DebtsTotalAssets=25,0001,75,000=0.143:1
 
(C)
(D)
(E)



Page No 4.122:

Answer:

(A)


(B)

(C)

Page No 4.122:

Answer:

1.
Inventory Turnover Ratio=Cost of Revenue From OperationsAverage Inventory                                                     =3,15,00029,500=10.68 timesAverage Inventory=Opening  Inventory+Closing Inventory2=24,000+35,0002=Rs 29,500Cost of Revenue From Operations= Opening  Inventory+PurchasesClosing Inventory                                             =24,000+3,26,00035,000=Rs 3,15,000

2.
Gross Profit Ratio =Gross ProfitRevenue From Operations×100                            =2,25,0005,40,000×100=41.67%Gross Profit=Revenue From Operations Costof Revenue From Operations                           =5,40,0003,15,000=Rs 2,25,000

3.
Working  Capital  Turnover  Ratio =Revenue  From  OperationsWorking  Capital×100 =5,40,0002,350=229.79  timesWorking Capital=CurrentAssetsCurrentLiabilities                                    =1,01,90099,550=Rs  2,350

4.
 Current Ratio=Current AssetsCurrent Liabilities                      =1,01,90099,550 =1.024:1

5.
Quick Ratio=Quick AssetsCurrent Liabilities                      =1,01,90035,00099,550 =0.67:1

6.
Net Profit Ratio=Net ProfitRevenue From Operations×100                            =98,0005,40,000×100=18.15%

7.
Debt to Equity Ratio=DebtEquity                                 =40,0002,66,700=0.15:1Equity=Share Capital+Reserve & Surplus             =1,85,000+81,700 = Rs 2,66,700

8.
Trade Receivables Turnover Ratio=Net Credit revenue From OperationsAverage Trade Receivables                                                      =3,24,00050,000=6.48 timesNet Credit revenue From Operations=5,40,000×60100 =Rs 3,24,000Average Inventory=Opening  Inventory+Closing Inventory2Average Trade Receivables=54,000+46,0002=Rs 50,000

9.
Proprietary  Ratio=Shareholder's  FundsTotal  Assets×100 =2,66,7004,06,250=0.66:1Shareholder's  Funds=ShareCapital+ReservesandSurplus                                         =1,85,000+81,700=Rs2,66,700

10.
Debt to Total Assets Ratio=DebtTotal Assets                                 =40,0004,06,250=0.098:1

11.
Earning  Per  Share=Earning  Available  to  Equity  ShareholdersNumber  of  Equity  Shares =98,0004,80012,500=Rs 7.456  per  shareEarning  Available  to  Equity  Shareholders=NetProfitDividendofPreferenceShareholders                                                                                       

12.
Return  on  Investment=Profit  Before  Interest &  TaxCapital  Employed×100 =1,43,2003,06,700=46.69%Profit  Before  Interest  &  Tax=NetProfit+TaxExpenses+InterestonDebentures                                                             =98,000+42,000+3,200=Rs 1,43,200

13.
Price-Earning Ratio=Market Price Per ShareEarning Per Share=37.287.456=5 times



Page No 4.124:

Answer:

Operating Ratio=Cost of Revenue from Operations+Operating ExpensesRevenue from Operations×100                                   =13,20,000+2,20,00022,00,000×100=70%Cost of Revenue from operations=Revenue from OperationsGross Profit                           =10,00,000 + 12,00,000 8,80,000=Rs 13,20,000Gross Profit = 22,00,000×40%=Rs 8,80,000                    

Inventory Turnover Ratio=Cost of Revenue From OperationsAverage Inventory                                        =13,20,0001,60,000=8.25 timesAverage Inventory=1,50,000+1,70,0002=Rs 1,60,000                         

Page No 4.124:

Answer:

A.
Trade Receivables Turnover Ratio=Net Credit revenue From OperationsAverage Trade Receivables                                                      =6,00,0001,60,000=3.75 timesAverage Trade Receivables=1,20,000+2,00,0002=Rs 1,60,000Revenue From Operations=Cash revenue From Operations + Credit revenue From Operations                                         8,40,000 =0.4 Credit revenue From Operations + Credit revenue From Operations                   Credit revenue From Operations=8,40,000×11.4=Rs 6,00,000

B.
Interest Coverage Ratio=Profit Before Interest & TaxInterest                                                      =7,82,00072,000=10.86 timesProfit Before Interest & Tax=4,97,000+2,13,000(4,97,000×3070)+72,000  = Rs 7,82,000                             

 

Page No 4.124:

Answer:

Current Ratio = Current AssetsCurrent Liabilities2.5=CACL2.5 CL=CAWorking Capital = CACL1,20,000=2.5 CLCLCL=Rs 80,000CA = 80,000×2.5 = Rs 2,00,000Quick Ratio = Current AssetsClosing StockCurrent Liabilities1.5  =  2,00,000Closing Stock80,000Closing Stock=Rs 80,000Quick Assets = Current Assets Closing Stock=2,00,00080,000=Rs 1,20,000Inventory Turnover Ratio = Cost of Revenue from OperationsAverage Stock3=3,00,000Average StockAverage Stock = Rs 1,00,001,00,000=Opening stock + 80,0002Opening stock=Rs 1,20,000

Page No 4.124:

Answer:

1.
Current  Ratio=Current  AssetsCurrent  Liabilities =16,40,0008,40,000 =2:1 Current  Assets=Inventories+CurrentInvestments+TradeReceivables+CashandBankBalances                                                                                             PrepaidExpenses+ Short  term  Loans  and  Advances                              = 7,90,000+20,000+8,00,000+10,000+10,000+10,000=Rs16,40,000Current  Liabilities=Trade  payables + Short  term  Bank  Loan + Other  Current  Liabilities                                                                   +Provision  for Taxation + Provision  for  Doubtful  Debts                                       = 2,00,000+80,000+2,80,000+2,40,000+40,000=Rs8,40,000

2.
Quick  Ratio=Quick  AssetsCurrent  Liabilities =16,40,0007,90,00010,0008,40,000 =1:1Quick  Assets  =CurrentAssets (Inventories+PrepaidExpenses)                             =16,40,0007,90,00010,000=Rs  8,40,000

3.
Debt to Equity Ratio=DebtEquity                                 =16,00,0008,00,000=2:1Equity=Share Capital+Reserve & Surplus        =2,00,000+2,00,000+1,60,000+2,40,000 = Rs 8,00,000Debt=12% Debentures+ Long term Provisions            =10,00,000+6,00,000=Rs16,00,000

4.
Debt to Total Assets Ratio=DebtTotal Assets                                 =16,00,00016,40,000+10,00,000+4,00,000=0.5:1

5.
Proprietary Ratio=Shareholder's FundsTotal Assets×100                            =8,00,00032,40,000=.25:1Total Assets = Fixed Assets + Non-Current Investments + Long term Loans and Advances + Inventories                              + Current Investments+ Trade Receivables + Cash and Bank Balances                               + Prepaid Expenses + Short term Loans and Advances = Rs 32,40,000

6.
Interest Coverage Ratio=Profit before Interest &TaxTotal Interest                            =6,00,0001,20,000=5 timesProfit before Interest &Tax = Profit after Interest &Tax + Tax + Interest on Debentures                                                           =2,40,000+2,40,000+1,20,000= Rs 6,00,000

7.
Inventory Turnover Ratio=Cost of Revenue From OperationsAverage Inventory                                                     =12,00,0005,00,000=2.4 timesAverage Inventory=Opening  Inventory+Closing Inventory2=2,10,000+7,90,0002=Rs 5,00,000Cost of Revenue From Operations= Opening Inventory + Purchases  Closing Inventory                                                                          =2,10,000+17,80,0007,90,000=Rs 12,00,000

8.
Trade Receivables Turnover Ratio=Net Credit revenue From OperationsAverage Trade Receivables                                                      =16,00,0008,00,000=2 timesNet Credit Revenue From Operations=Total Revenue From Operations Cash Revenue From Operations                                                                                =20,00,0004,00,000=Rs 16,00,000

9.
Trade Payables Turnover Ratio=Net Credit PurchasesAverage Trade Payables                                                      =17,80,0002,00,000=8.9 times

10.
Working Capital Turnover Ratio=Revenue From OperationsWorking Capital×100                            =20,00,0008,00,000=2.5 timesWorking Capital=16,40,0008,40,000=Rs 8,00,000

11.
Gross Profit Ratio=Gross ProfitRevenue From Operations×100                            =8,00,00020,00,000×100=40%Gross Profit= Revenue From Operations  Cost of Revenue From Operations                          =20,00,00012,00,000=Rs 8,00,000

12.
Net Profit Ratio=Net ProfitRevenue From Operations×100                            =2,40,00020,00,000×100=12%

13.
Operating Ratio=Cost of Revenue From Operations+Operating ExpensesRevenue From Operations×100                            =12,00,000+2,00,00020,00,000×100=70%

14.
Operating Profit Ratio =Operating ProfitRevenue From Operations×100                            =6,00,00020,00,000×100=30%Operating Profit = Gross ProfitOperating Expenses                                   =8,00,0002,00,000= Rs 6,00,000



Page No 4.97:

Answer:

Current Ratio = Current AssetsCurrent Liabilities

 

 Current Assets  =  Debtors + Prepaid Expenses + Cash + Marketable Securities + Inventory
  =  2, 00,000 + 20,000 + 60,000 + 40,000 + 80,000
  =  Rs 4, 00,000
 
Current Liabilities  =  Bills Payables + Creditors + Expenses Payables
  =  40,000 + 80,000 + 80,000
  =  Rs 2, 00,000 

Current Ratio = Current AssetsCurrent Liabilities=2: 1

Page No 4.97:

Answer:

Current Liabilities  =  Creditors + Other Current Liabilities
   =  80,000 + 4, 00,000
   =  Rs 4, 80,000
 
Working Capital  =  Current Assets – Current Liabilities
7, 00,000  =  Current Assets – 4, 80,000
Current Assets  =  Rs 11, 80,000

Current Ratio=Current AssetsCurrent Liabilities=11,80,0004,80,000=2.458: 1

Page No 4.97:

Answer:

Current Liabilities  =  Total Debt – Long Term Debts
   =  6, 50,000 – 5, 00, 000
   =  Rs. 1, 50,000
 
Working Capital  =  Current Assets – Current Liabilities
3, 00,000  =  Current Assets – 1, 50,000
Current Assets  =  Rs. 4, 50,000.

Current Ratio=Current AssetsCurrent Liabilities=4,50,0001,50,000=3: 1

Page No 4.97:

Answer:

Working Capital  =  Current Asset* – Current Liabilities
5, 00,000  =  6, 00,000   – Current Liabilities
Current Liabilities  =  Rs. 1, 00,000
 
(Current Asset*  =  Current Assets- Loose tools – Stores & Spares
   =  8, 00,000 – 15, 00,000 -50,000
   =  6, 00,000)

Current Ratio=Current AssetsCurrent Liabilities=6,00,0001,00,000=6: 1

Page No 4.97:

Answer:

Case: 1

Working Capital=Current AssetsCurrent Liabilities7,20,000=Current Assets2,40,000Current Assets=Rs 9,60,000      Current Ratio=Current AssetsCurrent Liabilities                      =9,60,0002,40,000 =4:1

 


Case: 2

Working Capital=Current AssetsCurrent Liabilities6,00,000=8,00,000Current LiabilitiesCurrent Liabilities=Rs 2,00,000      Current Ratio=Current AssetsCurrent Liabilities                      =8,00,0002,00,000 =4:1


 

Case: 3

Working Capital=Current AssetsCurrent Liabilities4,00,000=Current Assets2,00,000Current Assets=Rs 6,00,000      Current Ratio=Current AssetsCurrent Liabilities                      =6,00,0002,00,000 =3:1

 

 

Page No 4.97:

Answer:

Current Ratio=Current AssetsCurrent Liabilities=4,50,000+50,0002,00,000+50,000= 2: 1After Purchase



Page No 4.98:

Answer:

Let’s take Current Asset = Rs. 2, 50,000 and Current Liability = Rs. 1, 00,000
 

a. Payment to Creditors say Rs 50,000, So
 
Current Ratio=2,50,000-50,0001,00,000-50,000=4: 1 Improve
 
b. Sale of Machinery Say Rs. 50,000, So
 
Current Ratio=2,50,000+50,0001,00,000=3: 1 Improve
 
c. Purchase of Goods for Cash Say Rs. 50,000, So
 
Current Ratio=2,50,000+50,000-50,0001,00,000=2: 5: 1 No Change
 
d. Issue of Equity Shares Say Rs. 50,000
 
=2,50,000+50,0001,00,000=3: 1 Improve

Page No 4.98:

Answer:

Current Ratio=Current AssetsCurrent Liabilities=48,00024,000=2: 1
 

Current Assets  =  Inventories + Trade Receivables + Cash
  =  18,600 + 9,600 +19,800
  =  Rs 48,000
 
Current Liabilities  =  Bank Overdraft+ Trade Payables
  =  6,000 + 18,000
  =  Rs 24,000
Note: The answer provided in the book is 1 : 1, however, as per our solution the current ratio is 2 : 1.

Page No 4.98:

Answer:

Liquidity Ratio=Current Assets-Stock-Prepaid ExpensesCurrent Liability=2,40,000-75,000-15,0001,50,000=1,50,0001,50,000=1: 1

Page No 4.98:

Answer:

Current Assets  =  Liquid Assets + Stock + Prepaid Expenses
   =  1, 87,500 + 50,000 + 12,500
   =  Rs 2, 50,000
 
Working Capital  =  Current Assets – Current Liabilities
1, 50,000  =  2, 50,000 –Current Liabilities
Current Liabilities  =  Rs 1, 00,000

Current Ratio=Current AssetsCurrent Liabilities=2,50,0001,00,000=2.5: 1

Page No 4.98:

Answer:

Working Capital  =  Current Assets – Current Liabilities
5, 00,000  =  10, 00,000 –Current Liabilities
Current Liabilities =  Rs 5, 00,000


Liquidity Ratio=Current Ratio-Inventory (Stock)Current Liability-Bank Overdraft                          =10,00,000-2,00,0005,00,000=8,00,0005,00,000                           =1.6:1

Page No 4.98:

Answer:

Working Capital=Current AssetsCurrent Liabilities3,00,000=5,00,000Current LiabilitiesCurrent Liabilities=Rs 2,00,000      Quick Ratio=Quick AssetsCurrent Liabilities                   =5,00,00075,00025,0002,00,000 =2:1

Page No 4.98:

Answer:

Quick Ratio=Quick AssetsCurrent Liabilities                      =2,20,00047,5002,5001,70,000 =1:1

Page No 4.98:

Answer:



Page No 4.98:

Answer:



Page No 4.98:

Answer:



Page No 4.98:

Answer:

Liquidity Ratio=Current Assets - Stock Current Liability  2=Current Assets  - 50,0001,25,000   2,50,000=Current Assets - 50,000Current Assets=3,00,000

Current Ratio=Current AssetsCurrent Liabilities=3,00,0001,25,000=2.4: 1



Page No 4.99:

Answer:

Page No 4.99:

Answer:

 Working Capital  =  Current Assets – Current Liabilities
84,000  =  1, 00,000 – Current Liabilities
Current Liabilities  =  Rs 16,000

Page No 4.99:

Answer:


 

Working Capital  =  Current Assets – Current Liabilities
2, 40,000   =  2.5Current Liabilities - Current Liabilities
Current Liabilities  =  Rs 1, 60,000
Current Assets  =  2.5  1, 60,000 = Rs 4, 00,000

Page No 4.99:

Answer:

Current Assets  =  Inventories + Trade Receivables + Cash + Advance Tax
   =  1, 00,000 + 1, 00,000 + 60,000 +8,000
   =  Rs 2, 68,000
 
Current Liabilities  =  Trade Payables + Bank Overdraft
   =  2, 00,000 + 8,000
   =  Rs 2, 08,000

Current Ratio=Current AssetsCurrent Liabilities                         =2,68,0002,08,000=1.29:1

Quick Ratio=Current Assets-Stock-Prepaid ExpensesCurrent Liabilities                     =2,68,000-1,00,0002,08,000                     =1,68,0002,08,000=0.8:1

Page No 4.99:

Answer:

Current Assets  =  Inventories + Prepaid Expenses + Other Current Assets
   =  30,000 + 2000 + 50,000
   =  Rs 82,000



Liquidity Ratio=Current Assets-Stock-Prepaid ExpensesCurrent Liabilities                         =82,000-30,000-2,00040,000                         =50,00040,000=1.25:1

Page No 4.99:

Answer:

(i) Current Ratio=Current AssetsCurrent Liabilitiesor, Current Ratio=48,00048,000or, Current Ratio=1: 1
 

Current Assets  =  Inventories + Trade Receivables + Cash + Prepaid Expenses
  =  24,000 + 18,000 +4,560 + 1,440
  =  Rs 48,000
 
Current Liabilities  =  Bank Overdraft+ Trade Payables + Short term provision
  =  10,000 + 36,800 + 1,200
  =  Rs 48,000  

(ii) Liquid Ratio=Current Assets-Stock-Prepaid ExpensesCurrent Liabilityor, Liquid Ratio=48,000-24,000-1,44048,000or, Liquid Ratio=22,56048,000=0.47: 1



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