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

 
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

Additional Information :
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