Unit 5: Accounting Ratios

Q11Written answer

From the following information calculate:

(i) Gross Profit Ratio (ii) Inventory Turnover Ratio (iii) Current Ratio (iv) Liquid Ratio (v) Net Profit Ratio (vi) Working capital Ratio:

	₹
Revenue from Operations	25,20,000
Net Profit	3,60,000
Cast of Revenue from Operations	19,20,000
Long-term Debts	9,00,000
Trade Payables	2,00,000
Average Inventory	8,00,000
Current Assets	7,60,000
Fixed Assets	14,40,000
Current Liabilities	6,00,000
Net Profit before Interest and Tax	8,00,000

(i)

NCERT Act Class 12 Chp 5-58

NCERT Act Class 12 Chp 5-59

NCERT Act Class 12 Chp 5-60

NCERT Act Class 12 Chp 5-61

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Q12Written answer

Compute Gross Profit Ratio, Working Capital Turnover Ratio, Debt Equity Ratio and Proprietary Ratio from the following information:

	₹
Paid-up Share Capital	5,00,000
Current Assets	4,00,000
Revenue from Operations	10,00,000
13% Debentures	2,00,000
Current Liabilities	2,80,000
Cost of Revenue from Operations	6,00,000

NCERT Act Class 12 Chp 5-62

NCERT Act Class 12 Chp 5-63

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Q13Written answer

Calculate Inventory Turnover Ratio if:

Inventory in the beginning is ₹. 76,250, Inventory at the end is 98,500, Gross Revenue from Operations is ₹. 5, 20,000, Sales Return is ₹. 20,000, and Purchases is ₹. 3, 22,250.

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Q14Written answer

Calculate Inventory Turnover Ratio from the data given below:

	₹
Inventory in the beginning of the year	10,000
Inventory at the end of the year	5,000
Carriage	2,500
Revenue from Operations	50,000
Purchases	25,000

NCERT Act Class 12 Chp 5-65

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Q15Written answer

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

NCERT Act Class 12 Chp 5-67

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Let Sale Price be ₹ 100

Then Profit is ₹ 20

Hence, the Cost of Revenue from Operations = ₹ 100 − ₹ 20 = ₹ 80

If the Cost of Revenue from Operations is ₹ 80, then Revenue from Operations = 100

NCERT Act Class 12 Chp 5-68

Q16Written answer

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

		2015-16		2016-17
Trade receivables on Apr. 01	₹.	4,00,000	₹	5,00,000
Trade receivables on Mar. 31			₹	5,60,000
Stock in trade on Mar. 31	₹.	6,00,000	₹	9,00,000
Revenue from operations (at gross profit of 25%)	₹.	3,00,000	₹	24,00,000

Calculate Inventory Turnover Ratio and Trade Receivables Turnover Ratio.

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Q17Written answer

From the following Balance Sheet and other information, calculate following ratios:

(i) Debt-Equity Ratio (ii) Working Capital Turnover Ratio (iii) Trade Receivables Turnover Ratio

Balance Sheet as at March 31, 2017
Particulars	Note No.	₹.
I. Equity and Liabilities:
1. Shareholders’ funds
a) Share capital		10,00,000
b) Reserves and surplus		9,00,000
2. Non-current Liabilities
Long-term borrowings		12,00,000
3. Current Liabilities
Trade payables		5,00,000
Total		36,00,000
II. Assets
1. Non-current Assets
a) Fixed assets
Tangible assets		18,00,000
2. Current Assets
a) Inventories		4,00,000
b) Trade Receivables		9,00,000
c) Cash and cash equivalents		5,00,000
Total		36,00,000

Additional Information: Revenue from Operations ₹. 18, 00,000

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1. Debt-Equity Ratio

NCERT Act Class 12 Chp 5-70

Debt = Long Term Borrowings = ₹ 12,00,0000

Equity = Share Capital + Reserve and Surplus

= 10, 00,000 + 9, 00,000

= ₹ 19, 00,000

2. Working Capital Turnover Ratio

NCERT Act Class 12 Chp 5-71

Revenue from Operations = ₹ 18, 00,000

Working Capital = Current Assets – Current Liabilities

= 18, 00,000 – 5, 00,000

= ₹ 13, 00,000

3. Trade Receivables Turnover Ratio

NCERT Act Class 12 Chp 5-72

Net Credit Sales = ₹ 18, 00,000

Average Trade Receivables = ₹ 9, 00,000

Q18Written answer

From the following information, calculate the following ratios:

i) Quick Ratio

ii) Inventory Turnover Ratio

iii) Return on Investment

	₹.
Inventory in the beginning	50,000
Inventory at the end	60,000
Revenue from operations	4,00,000
Gross Profit	1,94,000
Cash and Cash Equivalents	40,000
Trade Receivables	1,00,000
Trade Payables	1,90,000
Other Current Liabilities	70,000
Share Capital	2,00,000
Reserves and Surplus	1,40,000

(Balance in the Statement of Profit & Loss A/c)

NCERT Act Class 12 Chp 5-73

NCERT Act Class 12 Chp 5-74

NCERT Act Class 12 Chp 5-75

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Q19Written answer

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

	₹
Equity Share Capital	75,000
Preference Share Capital	25,000
General Reserve	45,000
Balance in the Statement of Profits and Loss	30,000
Debentures	75,000
Trade Payables	40,000
Outstanding Expenses	10,000

NCERT Act Class 12 Chp 5-76

NCERT Act Class 12 Chp 5-77

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Q20Written answer

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

NCERT Act Class 12 Chp 5-78

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Numerical Questions for NCERT Accountancy Solutions Part 2 Class 12 Chapter 5