# 12th | Volume 3 | Chapter:4 | Question No. 151 to 156 | Accounting Ratio | Ts grewal Accounts Solution 2022-2023

#### Question 151:

Calculate following ratios on the basis of the given information:

(i) Current Ratio; (ii) Acid Test Ratio; (iii) Operating Ratio; (iv) Gross Profit Ratio.

 Current Assets `3,50,000; Revenue from Operations (Sales) `6,00,000; Current Liabilities `1,75,000; Operating Expenses `2,00,000; Inventory `1,50,000; Cost of Revenue from Operations `3,00,000;

(i)                 Current Ratio;

Current Ratio= Current Assets/ Current Liabilities

Current Ratio= 3,50,000/1,75,000

Current Ratio= 2/1= 2:1

(ii)              Acid Test Ratio;

Acid Test Ratio= Quick Assets/ Current Liabilities

Quick Assets=3,50,000-1,50,000=2,00,000

Current Ratio= 2,00,000/1,75,000

Current Ratio= 1.14:1

(iii)            Operating Ratio;

Operating Cost = Operating Expenses + Cost of Revenue from Operations

Operating Cost =2,00,000+3,00,000=5,00,000

Operating ratio= Operation Cost/ Revenue from Operation

Operating ratio= 5,00,000×100/6,00,000=83.33%

(iv)             Gross Profit Ratio

Gross Profit = Revenue from Operations (Sales) - Cost of Revenue from Operations

Gross Profit = 6,00,000-3,00,00

Gross Profit = 3,00,000

Gross Profit Ratio= Gross Profit×100/ Revenue from Operations

Gross Profit Ratio= 3,00,000×100/6,00,000 =50%

#### Question 152:

From the information given below, calculate any three of the following ratio:

(i) Gross Profit Ratio;
(ii) Working Capital Turnover Ratio:
(iii) Debt to Equity Ratio; and
(iv) Proprietary Ratio.

 ` ` Revenue from Operations (Net Sales) 5,00,000 Current Liabilities 1,40,000 Cost of Revenue from Operations (Cost of Goods Sold) 3,00,000 Paid-up Share Capital 2,50,000 Current Assets 2,00,000 13% Debentures 1,00,000

(i)

Net Sales = 5,00,000

Cost of Goods Sold = 3,00,000

Gross Profit = Net Sales − Cost of Goods Sold

= 5,00,000 − 3,00,000 = 2,00,000

Gross Profit Ratio= Gross profit ×100/Net Sales

= 2,00,000×100/5,00,000

= 40%

(ii)

Current Assets = 2,00,000

Current Liabilities = 1,40,000

Working Capital = Current Assets − Current Liabilities

= 2,00,000 − 1,40,000 = 60,000

Working Capital turnover ratio= Net Sales / Working Capital

=5,00,000/60,000

=8.33 Times

(iii)

Long-term Debts = 13% Debentures = 1,00,000

Equity = Paid-up Share Capital = 2,50,000

Debt-Equity Rato= Long-term Debts/ Equity

=1,00,000/2,50,000

=0.4:1

(iv)

Total Assets = Total Liabilities

= Current Liabilities + Paid-up Share Capital + 13% Debentures

= 1,40,000 + 2,50,000 + 1,00,000

= 4,90,000

Propietary Ratio= Shareholders’ Fund/ Total Assets

=2,50,000/4,90,000

=0.51:1

#### Question 153:

On the basis of the following information calculate:

(i) Debt to Equity Ratio; and
(ii) Working Capital Turnover Ratio.

 Information: ` ` Revenue from Operations: (a) Cash Sales 40,00,000 Paid-up Share Capital 17,00,000 (b) Credit Sales 20,00,000 6% Debentures 3,00,000 Cost of Goods Sold 35,00,000 9% Loan from Bank 7,00,000 Other Current Assets 8,00,000 Debentures Redemption Reserve 3,00,000 Current Liabilities 4,00,000 Closing Inventory 1,00,000

(i)

Long-term Debts = 6% Debentures + 9% Loan from Bank

= 3,00,000 + 7,00,000 = 10,00,000

Equity = Paid-up Share Capital + Debenture Redemption Reserve

= 17,00,000 + 3,00,000 = 20,00,000

Debts-Equity Ratio= Long-term Debts/ Equity

=10,00,000/20,00,000

=0.5:1

(ii)

Current Assets = Other Current Assets + Inventory

= 8,00,000 + 1,00,000

= 9,00,000

Working Capital = Current Assets − Current Liabilities

= 9,00,000 − 4,00,000

= 5,00,000

Net Sales = Cash Sales + Credit sales

= 40,00,000 + 20,00,000

= 60,00,000

Working Capital tunover Ratio=Net Sales/Working Capital

=60,00,000/5,00,000

= 12 Times

#### Question 154:

From the following, calculate (a) Debt to Equity Ratio; (b) Total Assets to Debt Ratio; and (c) Proprietary Ratio:

 Equity Share Capital ` 75,000 Debentures ` 75,000 Preference Share Capital ` 25,000 Trade Payable ` 40,000 General Reserve ` 45,000 Outstanding Expenses ` 10,000 Balance in Statement of Profit and Loss ` 30,000

(a)

Debt to Equity Ratio=Long term Debts/Shareholders' Funds

Debt to Equity Ratio=Debentures

Equity=Share Capital+Preference Share Capital+General Reserve+Balance in Statement of Profit & Losss

Debt to Equity Ratio=75,000/75,000+25,000+45,000+30,000=0.43:1

(b)

Total Assets to Debt Ratio=Total Assets/Long term Debts

Total Assets to Debt Ratio=Equity Share Capital+Preference Share Capital+General Reserve+Balance in Statement of Profit & Loss/Debentures+Trade Payables+Outstanding ExpensesDebentures

Total Assets to Debt Ratio=75,000+25,000+45,000+30,000+75,000+40,000+10,000/75,000

=4:1

(c)

Proprietary Ratio=Shareholders' Funds/Total Assets

Proprietary Ratio=Equity Share Capital+Preference Share Capital+General Reserve+Balance in Statement of Profit & Loss

Equity Share Capital+Preference Share Capital+General Reserve+Balance in Statement of Profit & Loss+Debentures+Trade Payables+Outstanding Expenses

Proprietary Ratio=75,000+25,000+45,000+30,000/75,000+25,000+45,000+30,000+75,000+40,000+10,000

=0.58:1 or 58.33%

#### Question 155:

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.

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

#### Question 156:

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

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%