# Important Questions Class 12 Accountancy Chapter13 Accounting Ratios

## CBSE Class 12 Accountancy Chapter 13 Important Questions – Free PDF Download

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## CBSE Class 12 Accountancy Important Questions Chapter 13 Accounting Ratios

1: Working Capital Rs. 36,000; Current Ratio 2.8:1; Inventory Rs. 16,000. Calculate Current Assets, Current Liabilities and Quick Ratio.
Solution :
Current Ratio =
Let the Current Liabilities be Rs. X
The Current Assets will be Rs. 2.8X
Working Capital = Current Assets – Current Liabilities
36,000 = 2.8X – X = 1.8 X
X = = Rs. 20,000
Quick Ratio =
Liquid Assets = Current Assets – Inventory
Rs. 56,000 – 16,000 = Rs. 40,000
Quick Ratio = = 2:1

2: Current Assets of a company are Rs. 15,00,000. Its current ratio 2.5 and liquid Ratio is 0.85. Calculate Current liabilities, Liquid Assets and Inventory.
Solution :
Current Ratio =
2.5=
Current Liabilities = = Rs. 6,00,000
Liquid Ratio =
0.85 =
Liquid Assets = = Rs. 5,10,000
Inventory = Current Assets – Liquid Assets
= Rs. 15,00,000 – Rs. 5,10,000
= Rs. 9,90,000

3: Calculate ‘Debt-Equity Ratio’ from the following information:
Total Assets : Rs. 3,50,000
Total Debt : Rs. 2,50,000
Current Liabilities : Rs. 80,000
Solution :
Debt Equity Ratio =
Debt = Total Debt – Current Liabilities
= Rs. 2,500,000-Rs. 80,000 = Rs. 1,70,000
Equity = Total Assets – Total Debts
= Rs. 3,50,000 – Rs. 2,50,000 = Rs. 1,00,000
Debt – Equity Ratio = = 1.7:1

4: From the following information calculate Proprietary Ratio and Total Assets to Debt Ratio
Balance Sheet of ABC Ltd.
As at

 Particulars Note No. Figure for Current Years (Rs.) 1. EQUITY AND LIABILITIES  (1) Shareholders’ funds (a) Share capital (b) Reserves and surplus (2) Non-current Liabilities Long-term borrowings (3) Current liabilities Trade payables Total 4,50,000  1,80,000 75,000 45,000 7,50,000 II. ASSETS  (1)Non-current assets (a)Fixed assets (b)Non-current investments (2)Current Assets Inventories Total 2,25,000  1,50,000 7,50,000

Solution :
Proprietary Ratio =
Shareholders’ Funds = Share Capital + Reserves and Surplus = Rs. 4,50,000+Rs.1,80,000 = Rs. 6.30.000
Proprietary Ratio = = 0.84 : 1
Total Assets to Debt Ratio =
= 10
Total Assets to Debt Ratio = 10 : 1

5: Calculate Interest Coverage Ratio from the following information
Net Profit (after taxes) = Rs. 1,00,000
Fixed interest charges on long term borrowing = Rs. 20,000
Rate of Income Tax 50%
Solution :
Interest Coverage Ratio =
Interest Coverage Ratio =
= 11 Times

6: From the following information calculate interest coverage ratio:
Rs.
10,000 equity shares to Rs. 10 each 1,00,000
8% Preference Shares 70,000
10% Debentures 50,000
Long term Loans from Banks 50,000
Interest on longs term loans from bank 5,000
Profit after tax 75,000
Tax 9,000
Solution :
Interest Coverage Ratio = = Rs. 5000
Profit before Interest & Tax = Profit after tax + Interest on debentures + Interest Long term Loans
= Rs. 75,000+9,000+5000+5000 = Rs. 94,000
Interest Coverage Ratio =
= 9.4 Times

7: For the following information compute Debt-Equity Ratio :
Rs.
Long term borrowing 8,00,000
Long term provisions 4,00,000
Current Liabilities 2,00,000
Non Current Assets 14,40,000
Current Assets 3,60,000
Solution :
Debt Equity Ratio =
Debt = Long term borrowing + Long term Provision
= Rs. 8,00,000+4,00,000
= Rs. 12,00,000
Equity = Non Current Assets + Current Assets – Debt – Current Liabilities
= Rs. 14,40,000+360,000-12,00,000-2,00,000
= Rs. 18,00,000-14,00,000
= Rs. 4,00,000
Debt Equity Ratio = = 3 : 1

8: Cost of Revenue from Operations is Rs. 5,00,000. The opening stock is Rs. 40,000 and the closing stock is Rs. 60,000 (at cost). Calculate inventory turnover ratio.
Solution :
Inventory Turnover Ratio =
Average Stock =
= Rs. 40,000+= Rs. 50,000
Inventory Turnover Ratio = = 10 Times

9: Cost of Revenue from operation = Rs. 2,00,000
Inventory Turnover Ratio = Rs. 8 Times
Inventory in the beginning is 1.5 times more than the inventory at the end.
Calculate values of opening and closing inventory.
Solution :
8 =
Average Inventory =
Average Inventory = Rs. 25,000 =
Opening Inventory +Closing Inventory
=
= Rs. 50,000
Let the closing Inventory = x
Then opening Inventory will be = x+1.5x = 2.5x
Hence, x+2.5x = 50000
3.5x = 50,000
X =
Closing Inventory = Rs. 14,286
Opening Inventory=  = Rs. 35,714

10: Calculate Debtors Turnover Ratio if Closing Debtors are Rs. 40,000; Opening Debtors Rs. 60,000; Cash Sales is 25% of Credit Sales and Total Sales are Rs. 2,00,000.
Solution :
Debtors Turnover Ratio =
Cash Sales = 25% of Credit Sales
Let the Credit Sales be Rs. X
Then Cash Sales is 25% of X
=
Total Sales = Cash Sales + Credit Sales
=
Rs. 2,00,000
=
X = Credit Sales
=
Average Debtors
=

Debtors Turnover Ratio
=

11: Compute Working Capital Turnover Ratio from the following information:
Rs.
Cash Sales 1,30,000
Credit Sales 3,80,000
Sales Return 10,000
Liquid Assets 1,40,000
Inventory 90,000
Current Liabilities 1,05,000
Solution:
Working Capital Turnover Ratio
=
Net Sales = Cash Sales + Credit Sales – Sales Return
= 1,30,000+3,80,000-10,000 = Rs. 5,00,000
Working Capital = Current Assets – Current Liabilities
Current Assets = Liquid Assets + Inventory
= 1,40,000+90,000 = Rs. 2,30,000
Working Capital = 2,30,000 – 1,05,000 = Rs. 1,25,000
Working Capital Turnover Ratio
=

12: Calculate ‘Gross Profit Ratio’ from the following information:
Rs.
Net Revenue from Operations 80,000
Cost of Revenue from Operations 60,000
Operating Expenses 10,000
Indirect Expenses 60,000
Solution :
Gross Profit Ratio =
= Rs. 80,000-60,000 = Rs. 20,000

13: Calculate ‘Operating Profit Ration’ and ‘Operating Ratio’ from the following information:
Rs.
Net Revenue from Operations80,000
Cost of Revenue from Operations60,000
Operating Expenses10,000
Indirect Expenses60,000
Solution :
Operating profit Ratio =
Operating profit = Net Revenue from Operation – Operating Cost
Operating Cost = Cost of Revenue from Operation + Operating Expenses
= Rs. 60,000+10,000 = Rs. 70,000
Operating profit =80,000 -70,000 = Rs. 10,000
Operating profit Ratio =
Operating Ratio =

14: Calculate ‘Net Profit ration’ from the following Information:
Rs.
Net Revenue from Operations 80,000
Cost of Revenue from Operations 60,000
Operating Expenses 10,000
Indirect Expenses 6,000
Indirect Income 4,000
Solution :
Net Profit Ratio =
Net Profit = Net Revenue from Operations – Cost of Revenue from operation Operating Expenses – Indirect Expenses + Indirect Income
= Rs. 80,000 – 60,000 – 10,000 – 6,000 + 4,000 = 8,000
Net profit Ratio =
=

15: Calculate ‘Return on Investment’ with the following information:
Rs.
Net Profit after interest and Tax2,10,000
Rate of income Tax30%
Shareholders’ Funds13,00,000
12% Long term Debts1,00,000
10% Debentures2,00,000
Solution :
Retrun on Investment =
Profits before Tax
=
=
Profits before Interest, Tax and Dividend = Profits before Tax + Interest on Long Debts + Intere3st on Debentures = 3,00,000 +12,000 + 20,000 = 3,32,000.
Capital Employed = Shareholders’ Funds + 12% Long term debts + 10%
Debentures = 13,00,000 +1,00,000 +2,00,000 = 16,00,000.
Returns on Investment
=

16 : The Quick ratio of X Ltd. Is 1:1. State with reason which of the following transactions would (i) increase; (ii) decrease or (iii) not change the ratio:
1. Included in the trade payable was a Bill payable of Rs. 3,000 which was met on maturity .
2. Debentures of Rs. 50,000 were converted into Equity Shares.
Solution:
(1) No Change
Reason: Both current Assets and current Liabilities are decreasing with the same amount.
(2) No Change
Reason: Neither current Assets and current Liabilities are decreasing with the same amount.

17: Calculate ‘Return on Investment’ and ‘Debt-Equity Ratio’ from the following information:
Rs.
Net Profit after interest and Tax 6,00,000
10 % Debentures 10,00,000
Tax Rate40 %
Capital Employed 80,00,000
Solution:
Retrun on Investment =
Net Profits before Tax
=
=
Interest on 10 % Debentures
=
Net Profit before Interest and Tax = Rs. 10,00,000 + Rs. 1,00,000 = Rs. 11,00,000
Return on Investment
=
Debt – Equity Ratio
=
Equity = Capital Employed – Debt
= Rs. 80,00,000 – 10,00,000 = Rs. 70,00,000.
Debt Equity Ratio
=
= 0.14:1

18: Complete the Balance Sheet of Raj Ltd. From the following information :
Balance Sheet
As at 31st March, 2015

 Particulars Note No. Amount  (Rs.) 1. EQUITY AND LIABILITIES  (1) Shareholders’ funds (a) Share capital (b) Reserves and surplus (2) Non-current Liabilities – Long-term borrowings (3) Current liabilities – Trade payables Total –  50,000 14,00,000 1,00,00 II. ASSETS  (1)Non-current assets (a)Fixed assets (2)Current Assets (a) Inventories (b) Trade Receivables (c) Cash and Cash Equivalents Total _  _ 70,000 _

1. Current Ratio is 2.5:1
2. Debt-equity Ratio is 2:1
3. Inventory Turnover Ratio is 8 Times
4. Cost of Revenue from operation is Rs. 4,00,000
Solution :
(i) Inventory Turnover Ratio =
8 =
Inventory =
(ii)

Current Assets =
= Rs. 1,30,000
(iii) Debt Equity Ratio =

= Rs. 7,00,000
Equity = Share Capital + Reserves and Surplus
Rs. 7,00,000 = Share Capital + 50,000
Share Capital = Rs. 7,00,000-50,000 = Rs. 6,50,000
Balance Sheet
As at 31st March, 2015

 Particulars Note No. Amount  (Rs.) 1. EQUITY AND LIABILITIES  (1) Shareholders’ funds (a) Share capital (b) Reserves and surplus (2) Non-current Liabilities Long-term borrowings (3) Current liabilities Trade payables Total 6,50,000  50,000 14,00,000 1,00,00 22,00,000 II. ASSETS  (1)Non-current assets (a)Fixed assets (2)Current Assets (a) Inventories (b) Trade Receivables (c) Cash and Cash Equivalents Total 19,50,000  50,000 70,000 1,30,000 22,00,000