Page No
4.124:
Question
161:
From the following information related to Naveen Ltd.,
calculate (a) Return on Investment and (b) Total Assets to Debt Ratio:
Information: Fixed Assets ` 75,00,000; Current
Assets ` 40,00,000; Current
Liabilities ` 27,00,000; 12%
Debentures ` 80,00,000 and Net
Profit before Interest, Tax and Dividend ` 14,50,000.
Answer:
1) Return on Investment
Return on Investment = Net profit Before Interest, Tax and dividend ×100/
Capital Employed
Net profit
Before Interest, Tax and dividend=14,50,000
Capital
employed= Fixed Assets + Current Assets+ Current Liabilities
=75,00,000+40,00,000+27,00,000
=88,00,000
Return on Investment =14,50,000×100/88,00,000
=16.48%
2) Total Assets to Debt to Ratio
Total Assets to Debt Ratio = Total Assets/Debt
Total Assets = Fixed Assets + Current Assets
= ` (75,00,000 + 40,00,000)
= ` 1,15,00,000
Debt = ` 80,00,000
Total Assets to Debt Ratio = 1,15,00,000/80,00,000
= 1.44:1
Page No 4.124:
Question
162:
Calculate Revenue from operations
of King Ltd. from the following information;
Currents Assets `20,00,000; Quick Ratio is 1.5:1 ; Current Ratio is 2:1; Inventory
Turnover Ratio is 6 Times; Goods are sold at a profit of 25% on Cost.
Answers;
Currents Assets =`20,00,000
Current Ratio = 2:1
Quick Ratio= 1.5:1
Quick Assets = `15,00,000
Cost of revenue =100
Gross profit = 25% on Cost
Revenue = 100 + 25 =125
Revenue from operations
|
= Cost of revenue × 125/100
=30,00,000× 125/100=
=37,50,000
|
Inventory Turnover Ratio
|
= Cost of revenue/ Average inventory
|
6
Cost of revenue
|
= Cost of revenue / 5,00,000
= 5,00,000 × 6
=30,00,000
|
|
|
|
Inventory
5,00,000
|
= Current Assets - Quick Assets
= 20,00,000-15,00,000
|
Page No 4.124:
Question
163:
Quick
Ratio 1.5, Current Ratio 2, Total Current Assets `20,00,000,
Inventory Turnover Ratio 6 Times.
Goods
are sold on 20% Profit on Sales . Calculate Revenue from operation.
Answers;
Current
Assets = `20,00,000
Current
Ratio = 2
Quick
Ratio = 1.5
Revenue from operations
|
= Cost of revenue × 100/80
= 30,00,000× 125/100=
= 37,50,000
|
Inventory Turnover Ratio
|
= Cost of revenue/ Average inventory
|
6
Cost of revenue
|
= Cost of revenue / 5,00,000
= 5,00,000 × 6
=30,00,000
|
Inventory
5,00,000
|
= Current Assets - Quick Assets
= 20,00,000-15,00,000
|
|
|
|
Quick Assets
15,00,000
|
= Current Assets × 1.5
= 20,00,000 × 1.5
|
Page No 4.124:
Question 164:
From the following information, calculate Return on Investment (or Return on Capital Employed):
|
|
|
|
|
|
Particulars |
` |
||
|
Share Capital |
5,00,000 |
||
|
Reserves
and Surplus |
2,50,000 |
||
|
Net
Fixed Assets |
22,50,000 |
||
|
Non-current
Trade Investments |
2,50,000 |
||
|
Current
Assets |
11,00,000 |
||
|
10%
Long-term Borrowings |
20,00,000 |
||
|
Current
Liabilities |
8,50,000 |
||
|
Long-term
Provision |
NIL |
||
|
|
|
|
|
Answer:
Net
Profit before tax = 6,00,000
Net Profit before interest, tax and dividend = Net Profit before tax + Interest
on long-term borrowings
= 6,00,000 + 10% of 20,00,000 = 6,00,000 + 2,00,000 = 8,00,000
Capital Employed = Share Capital + Reserves and Surplus + Long-term borrowings
= 5,00,000 + 2,50,000 + 20,00,000 = 27,50,000
Return on Investment = Net
profit Before Interest, Tax and Dividend
×100/ Capital Employed
=8,00,000×100/27,50,0000
=29.09%
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