CA.

Naresh Aggarwal’s
ACADEMY of ACCOUNTS
Accounting • Costing • Taxation • Financial Management
West Patel Nagar, New Delhi. Ph:8800215448. Website: www.academyofaccounts.org

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AoA
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Bank Balance 45,000

CA. Naresh Aggarwal’s Stock 70,000
ACADEMY of ACCOUNTS Long-term loan
General Reserve
1,00,000
20,000
Accounting • Costing • Taxation • Financial Management [Quick Ratio: 2 : 1; Current Ratio: 3 : 1]
West Patel Nagar, New Delhi. Ph:8800215448. Website: www.academyofaccounts.org
Q-5: The following is the Balance Sheet of X Ltd. as on 31 December 2005 :
Q-1: The following is the balance sheet of Bheem Manufacturing Co. Ltd, as on 31 Liabilities Amount Assets Amount
December 2005:
Equity Share Capital 2,00,000 Land and Buildings 1,50,000
Liabilities Amount Assets Amount Reserves 90,000 Plant and Machinery 80,000
Equity capital 50,000 Plant & Machinery 90,000 Profit for the year 60,000 Stock 1,40,000
Profit & Loss A/c 10,000 Sundry Debtors 8,000 Bank Overdraft 30,000 Debtors 80,000
13% Debentures 30,000 Stock 24,000 Trade Creditors 1,00,000 Cash 30,000
Sundry Creditors 46,800 Cash at Bank 14,560 4,80,000 4,80,000
Provision for Taxation 1,200 Prepaid insurance 1,440
You are required to calculate :

AoA
1,38,000 1,38,000 (a) Quick Ratio
From the above data calculate Current ratio and Quick Ratio. (b) Current Ratio
[Current Ratio 1 : 1 & Quick Ratio 0.47:1] [(a): 11: 13; (b): 25: 13]

Q-2: Compute the Current Ratio and Quick Ratio from the following information : Q-6: From the following Balance Sheet of Y Ltd. for the year ended 31 December
Goodwill Rs.80,000; Land and Buildings Rs.60,000; Stock Rs.13,640; Sundry Debtors 2005 calculate :
Rs.26,150; Cash Rs.2,430; Payments in Advance Rs.3,100; Bills Receivable Rs.1,130; (a) Current Ratio (b) Quick Ratio
Advance Income Tax Paid Rs.5,000; Sundry Creditors Rs.20,300; Bills Payable (c) Working Capital Turnover Ratio (d) Fixed Assets Turnover Ratio
Rs.900; Bank Overdraft Rs.2,600; Proposed Dividend Rs.4,300; Provision for Income (e) Current Assets Turnover Ratio
Tax Rs.6,200; Liabilities Amount Assets Amount
[Current Ratio 1.5 : 1 & Quick Ratio 0.85 : 1]
Equity Share capital 75,000 Fixed Assets 40,000
Q-3: From the following information, calculate Current Ratio: Profit for the year 50,000 Stock 90,000
Stock Rs.15,000; Debtors (good) Rs.13,500; Cash in hand Rs.7,000; Bank Balance Reserves 25,000 Debtors 93,000
Rs.8,000; Bills Receivable Rs.6,000; Plant and Machinery Rs.60,000; Creditors Trade Creditors 76,000 Cash 7,000
Rs.15,500; Bills Payable Rs.8,000; Accrued Interest on Debentures Rs.350, Prepaid Bills Payable 14,000 Underwriting Commission 10,000
Expenses Rs.500; Debentures Rs.25,000; Provision for taxation Rs.1,150. 2,40,000 2,40,000
[2 : 1]
Sales of the year amounted to Rs.3,00,000.
Q-4: From the following information, calculate Quick Ratio and Current Ratio: [(a) 2.1 : 1; (b) 1.1 : 1; (c) 3 times; (d) 7.5 times; (e) 1.58 times]
Particulars Rs.
Share Capital 1,50,000 Q-7: From the following particulars, you are required to compute :
Bills Payable 13,000 (i) Current Ratio, (ii) Quick Ratio, (iii) Working Capital Turnover Ratio
Creditors 57,000 (iv) Fixed Assets Turnover Ratio, (v) Current Assets Turnover Ratio
Debentures 2,75,000 Particulars Rs. Particulars Rs.
Debtors 95,000 Stock 70,000 Creditors 10,000
Debtors 40,000 Bills Payable 40,000
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Particulars Rs.
CA. Naresh Aggarwal’s Opening Stock 29,000
ACADEMY of ACCOUNTS Closing Stock
Sales
31,000
3,00,000
Accounting • Costing • Taxation • Financial Management Gross Profit Ratio 20% of Sales
West Patel Nagar, New Delhi. Ph:8800215448. Website: www.academyofaccounts.org [Cost of Goods Sold: Rs.2,40,000; Stock Turnover Ratio: 8 Times]

Bills Receivables 20,000 Bank Overdraft 50,000 Q-12: Calculate Stock turnover Ratio from the following information :
Advances Paid 10,000 Net Sales 5,60,000 Particulars Rs.
Cash in Hand 30,000 Gross Block 140,000 Fixed Assets (original Cost) 4,00,000
Cost of Goods Sold 4,20,000 Accumulated Depreciation 28,000 Opening Stock 58,000
[(i) 1.7 : 1; (ii) 0.9 : 1; (iii) 8 Times; (iv) 5 Times; (v) 3.3 Times] Purchases 4,84,000
Sales 6,40,000
Q-8: On the basis of following information, calculate Gross Profit Ratio 25% on Sales.
(i) Stock Turnover Ratio (ii) Working Capital Turnover Ratio [Cost of Goods Sold Rs. 4,80,000; Closing stock Rs. 62,000; Stock Turnover Ratio: 8 times]
(iii) Fixed Assets Turnover Ratio (iv) Current Assets Turnover Ratio
Particulars Rs. Particulars Rs. Q-13: Calculate Stock turnover Ratio from the following information :

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Total Sales 31,00,000 Current Liabilities 2,00,000 Particulars Rs.
Cost of Goods sold 20,00,000 Fixed Assets 5,00,000 Opening Stock 40,000
Current Assets 6,00,000 Stock 2,50,000 Purchases 4,20,000
Sales Returns 1,00,000 Loan 1,25,000 Sales 6,00,000
[(i): 8 Times; (ii): 7.5 Times or 5 Times; (iii): 6 Times or 4 Times; (iv): 5 Times or 3.33 Times] Gross Profit Ratio 331/3% on Sales
[Cost of goods sold Rs. 4,00,000; Closing stock Rs. 60,000; Stock Turnover Ratio: 8 times]
Q-9: From the following information, calculate Stock Turnover Ratio and Gross Profit
Ratio. Q-14: From the following information, calculate Stock Turnover Ratio, Gross Profit
Opening Stock 18,000 Ratio and Net Profit Ratio :
Closing Stock 22,000 Particulars Rs. Particulars Rs.
Purchases 72,000 Opening Stock 18,000 Wages 14,000
Wages 24,000 Closing Stock 22,000 Sales 80,000
Sales 1,25,000 Purchases 46,000 Carriage Inward 4,000
Carriage Inward 8,000 Indirect Expenes 7,000 Income Tax 5,000
[Stock Turnover Ratio: 5 times; Gross Profit Ratio: 20%] [Stock Turnover Ratio: 3 Times, Gross Profit Ratio: 25%, Net Profit Ratio: 10%]

Q-10: From the following information, calculate Stock Turnover Ratio and Gross Profit Q-15: From the following information, calculate Stock Turnover Ratio, Gross Profit
Ratio : Ratio and Net Profit Ratio :
Particulars Rs. Particulars Rs. Particulars Rs. Particulars Rs.
Opening Stock 18,000 Purchases 46,000 Opening Stock 24,000 Wages 20,000
Closing Stock 22,000 Carriage Inwards 4,000 Closing Stock 26,000 Sales 1,20,000
Wages 14,000 Sales 80,000 Purchases 73,000 Carriage Inward 9,000
[Stock Turnover Ratio: 3 Times; Gross Profit Ratio: 25%] Indirect Expenes 10,000 Income Tax 4,000
[Stock Turnover Ratio 4 Times, Gross Profit Ratio 16.67%, Net Profit Ratio: 5%]
Q-11: Calculate Stock Turnover Ratio from the following :
Q-16: From the following details, calculate Debtors Turnover Ratio:
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Q-21: From the following information, calculate Debtors Turnover Ratio and Average
CA. Naresh Aggarwal’s Collection Period :
ACADEMY of ACCOUNTS Particulars
Opening Debtors
Rs.
37,000
Accounting • Costing • Taxation • Financial Management Closing Debtors 43,000
West Patel Nagar, New Delhi. Ph:8800215448. Website: www.academyofaccounts.org Total Sales 6,00,000
Cash sales 80,000
Particulars Rs. [Debtors Turnover Ratio: 13 Times; Collection Period: 4 Weeks]
Total Sales for the year 1,75,000
Cash Sales 20% of total sales Q-22: Calculate Debtors Turnover Ratio and Average Collection Period from the
Sales Returns out of Credit Sales 10,000 following information :
Opening balance of Sundry Debtors 8,000 Particulars Rs.
Closing balance of Sundry Debtors 12,000 Total Sales 2,80,000
[13 Times] Cash Sales 40,000
Debtors at the beginning of the year 20,000
Q-17: Calculate Debtors Turnover Ratio and Average Collection Period in terms of Debtors at the end of the year 60,000
months from the following : Bills receivable at the beginning of the year 25,000

AoA
Credit sales for the year 60,000 Bills receivable at the end of the year 15,000
Debtors 5,000 [Debtors Turnover Ratio: 4 Times; Collection Period: 3 Months]
Bills Receivable 5,000
[Delhi 1998] Q-23: From the following details, calculate Creditors Turnover Ratio and Average
[Debtors Turnover Ratio: 6 Times; Average Collection Period: 2 Months] Payment Period :
Particulars Rs.
Q-18: Compute the Debtors turnover ratio from the following figure. Total Purchases for the year 3,50,000
Particulars 2004 2005 Cash Purchases 20% of Total Purchases
Gross Sales 9,00,000 8,50,000 Purchases Returns out of Credit Purchases 40,000
Debtors in the beginning of year 83,000 ? Opening balance of Sundry Creditors 16,000
Debtors at the end of the year 1,17,000 43,000 Closing balance of Sundry Creditors 24,000
Sales Returns 1,00,000 50,000 [Creditors Turnover Ratio: 12 Times; Average Payment Period: 1 Month]
[Year 2004: 8 Times; Year 2005: 10 Times]
Q-24: Calculate Creditors Turnover Ratio and Average Payment Period from the
Q-19: Compute the Debtors turnover ratio from the following figure. following information :
Particulars 2004 2005 Credit Purchases for the year 90,000
Gross Sales 4,40,000 7,20,000 Creditors 10,000
Debtors in the beginning of year 54,000 56,000 Bills Payable 5,000
Debtors at the end of the year ? 44,000 [Creditors Turnover Ratio: 6 Times; Average Payment Period: 2 Month]
Sales Returns 30,000 50,000
Cash Sales 1,10,000 70,000 Q-25: From the following information, calculate Creditors Turnover Ratio and Average
[Year 2004: 5.45 Times; Year 2005: 12 Times] Payment Period :
Opening Creditors 74,000
Q-20: Calculate Debtors Turnover Ratio and Average collection period if Credit sales Closing Creditors 86,000
for the year was Rs.60,000; Debtors were Rs.5,000 and Bills Receivable were Total Purchases 12,00,000
Rs.5,000. Cash Purchases 1,60,000
[Debtors Turnover Ratio: 6 Times; Collection Period: 2 Months] [Creditors Turnover Ratio: 13 Times; Payment Period: 4 Weeks]
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Q-29: The following information is given about a company :

CA. Naresh Aggarwal’s Particulars Rs.
ACADEMY of ACCOUNTS Sales
Sales Returns
1,54,000
4,000
Accounting • Costing • Taxation • Financial Management Gross Profit 30,000
West Patel Nagar, New Delhi. Ph:8800215448. Website: www.academyofaccounts.org Cost of Goods sold 1,20,000
Opening Stock 35,000
Q-26: Calculate Creditors Turnover Ratio and Average Payment Period from the Closing Stock 45,000
following information : Office Expenses 12,000
Particulars Rs. Selling Expenses 6,000
Total Purchases 1,40,000 Loss on Sale of Fixed Assets 2,500
Cash Purchases 20,000 Interest Paid 1,500
Creditors at the beginning of the year 10,000 Income Tax Paid 500
Creditors at the end of the year 30,000 Debtors 25,000
Bills Payble at the beginning of the year 12,500 Net Fixed Assets 1,10,000
Bills Payble at the end of the year 7,500 From the above information Calculate:
[Creditors Turnover Ratio: 4 Times; Payment Period: 3 Months] (i) Operating Ratio (ii) Gross Profit Ratio

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(iii) Debtors Turnover Ratio (iv) Stock Turnover Ratio
Q-27: From the following particulars, you are required to compute : (v) Average Collection Period (vi) Net Profit Ratio
(i) Current Ratio (ii) Operating Expenses Ratio (vii) Operating Profit Ratio
(iii) Gross Profit Ratio (iv) Net Profit Ratio [(i) 92%, (ii) 20%, (iii) 6 Times; (iv) 3 Times; (v) 2 Months; (vi) 5%; (vii) 8%]
Particulars Rs. Particulars Rs.
Stock 2,000 Non Operating Expenes 2,100 Q-30: From the following information, calculate :
Debtors 4,500 Bills payable 4,000 (i) Operating Ratio, (ii) Stock Turnover Ratio, (iii) Quick Ratio, (iv) Current Ratio
Bills Receivable 2,500 Sales (Gross) 72,000 Sales Rs.15,00,000; Cost of goods sold Rs.9,00,000; Operating Expenses Rs.2,40,000;
Cash in hand 1,000 Sales Returns 2,000 Profit before Tax Rs.2,70,000; Current Assets Rs.4,87,500; Current Liabilities
Gross Profit 4,900 Operating Expenses 1,400 Rs.3,00,000; Fixed Assets Rs.2,62,500; Opening Stock Rs.2,50,000; Closing Stock
Creditors 4,000 Outstanding Expenses 2,000 Rs.3,50,000.
[(i): 1 : 1; (ii): 95%; (iii): 7%; (iv): 2%] [(i): 76%; (ii): 3 Times; (iii): 0.46 : 1, (iv): 1.63 : 1]

Q-28: From the following data, calculate : Q-31: Following figures have been extracted from the books of Elite Electricals:
(i) Gross Profit Ratio (ii) Operating Ratio Particulars Rs.
(iii) Current Ratio (iv) Operating Profit Ratio Net Sales 30,00,000
Particulars Rs. Cost of Goods Sold 20,00,000
Sales 40,000 Operating Expenses 4,00,000
Cost of Sales 24,000 Current Assets 6,00,000
Office and Administration Expenses 7,000 Current Liabilities 2,00,000
Selling and Distribution Expenses 5,000 Paid up Share Capital 5,00,000
Current Assets 6,000 Debentures 2,50,000
Stock 1,000 Compute following ratios based on above figures :
Current Liabilities 2,000 (a) Gross Profit Ratio (b) Operating Ratio;
Paid up Share Capital 5,000 (c) Working Capital Turnover ratio (d) Operating Profit Ratio
Debentures 2,500 [(a) 33.33%, (b) 80%, (c) 7.5 times; (d) 20%]
[(i) 40%, (ii) 90%, (iii) 3 : 1; (iv) 10%]
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Liabilities Amount Assets Amount

CA. Naresh Aggarwal’s
ACADEMY of ACCOUNTS Equity Capital (10/- each)
Reserves
2,00,000
1,00,000
Land and Buildings
Plant and Machinery
1,50,000
90,000
Accounting • Costing • Taxation • Financial Management Profit for the year 60,000 Stock 1,40,000
West Patel Nagar, New Delhi. Ph:8800215448. Website: www.academyofaccounts.org Bank Overdraft 30,000 Debtors 80,000
Trade Creditors 10,000 Cash 30,000

Q-32: Calculate Stock Turnover Ratio and Gross Profit Ratio from the following : 4,90,000 4,90,000

Particulars Amount Particulars Amount An interim dividend of 15% was paid on equity shares. Market Price of a share is
Rs.18. Calculate :
Opening Stock 75,000 Sales 3,00,000
(a) Return on Investment
Purchases 1,00,000 Less : Returns 50,000 2,50,000
(b) Earning Per Share
Carriage Inward 4,000 Closing Stock 10,000
(c) Dividend Per Share
Wages 11,000
(d) Price Earning Ratio
Manufacturing Expenses 9,000
Gross Profit 61,000
[(a): 30%; (b): Rs.4.50; (c): Rs. 1.50; (d): 4 Times]

AoA
2,60,000 2,60,000
Q-35: Calculate Return on Investment, Earning Per Share, Return on Equity and
[Stock Turnover Ratio 4.45 Times; Gross Profit Ratio 24.4%]
Dividend Per Share from the following informations:
Particulars Rs.
Q-33: Calculate Operating Ratio, Operating Profit Ratio, Gross Profit Ratio and Net
Equity Share Capital (Rs.10 each) 5,00,000
Profit Ratio from the following Trading and Profit & Loss A/c of M/s Sudha Ltd.
12% Preference Share Capital 1,00,000
Trading and Profit & Loss Account
Reserves 2,00,000
for the year ending 31.12.2005
15% Loan 2,40,000
Particulars Amount Particulars Amount 10% Debentures 1,20,000
Current Liabilities 75,000
To Stock (1.1.2005) 45,000 By Sale (Less: Sales Returns) 3,00,000
Preliminary Expenses 10,000
To Purchases 1,10,000 By Stock (31.12.2005) 55,000
Income Tax Paid 50,000
To Wages 15,000
Net Profit (after interest but before tax) 1,82,000
To Gross Profit c/d 1,85,000
Equity Dividend Paid 20%
3,55,000 3,55,000 [Return on Investment: 20%; Earning Per Share: Rs. 2.40; Dividend Per Share: Rs.2; ROE: 17.4%]

To Administrative Expenses 6,000 By Gross Profit b/d 1,85,000

Q-36: Calculate Return on Capital employed (ROI), Earning Per Share (EPS) and
To Selling Expenses 8,000 By Rent Received 10,000
Dividend Per Share from the following details:
To Interest Paid 16,000
Gross Profit Rs.2,70,000; Administration expenses Rs.60,000; Selling Expenses
To Net Profit 1,65,000
Rs.30,000; 15% Debentures Rs.2,00,000; Rate of Income Tax 40%; Fixed Assets
1,95,000 1,95,000 Rs.6,00,000; Current Assets Rs.2,00,000; Current Liabilities Rs.50,000; Dividend Paid
Rs.50,000; Equity Share Capital Rs.5,00,000 of Rs.20 each.
[Operating Ratio: 43%; Operating Profit Ratio: 57%;
[Return on Investment: 24%; Earning Per Share: Rs. 3.60; Dividend Per Share: Rs.2]
Gross Profit Ratio: 61.67%; Net Profit Ratio: 55%]
Q-37: The Return on Investment of a company is 20%. Tax is paid by the company
Q-34: The following is the Balance Sheet of X Ltd. as on 31 December 2005 :
at the rate of 40%. The company had taken a loan of Rs.30 lakhs as a part of capital
employed on which interest was paid at the rate of 12%. Calculate the amount of
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Particulars Rs.
CA. Naresh Aggarwal’s Equity Capital (Rs.10 each) 2,00,000
ACADEMY of ACCOUNTS 12% Preference Capital
General Reserve
1,50,000
50,000
Accounting • Costing • Taxation • Financial Management 10% Debentures 2,00,000
West Patel Nagar, New Delhi. Ph:8800215448. Website: www.academyofaccounts.org Net Profit before interest & Tax 1,20,000
Rate of Tax 40%
shareholders gain due to the inclusion of loan in the capital employed. Total Dividend Paid (Including Prefance Dividend) 75% of Net Profit
[Rs.1,44,000] Market Price per Equity Share 31.50
[EPS: Rs. 2.10; Dividend Per Share: Rs.1.35; ROE: 16.8%; ROI: 20%; Price Earing Ratio: 15]
Q-38: A company has taken a loan of Rs.20,00,000 as part of its Capital employed.
The interest payable on the loan is 15% and ROI of the Company is 25%. The rate of Q-42: Calculate Return on Investment and Earning Per Share from the following:
income tax is 40%. Calculate the gain to the shareholders due to the loan raised by the Particulars Rs.
Company. Equity Capital (50/- each) 5,00,000
[Rs.1,20,000] 10% Loan 3,00,000
Reserves 2,00,000
Q-39: Calculate Return on Investment, Return on Equity, Earning per share, Dividend Plant and Machinery 1,80,000

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Per Share and Price Earning Ratio from the following information : Net Profit for the year (after charging 40% Income Tax) 72,000
Particulars Rs. Stock 2,80,000
Equity Capital (Rs.10 per share) 8,00,000 Bank Overdraft 60,000
10% Preference Capital 1,00,000 Trade Creditors 20,000
8% Debentures 2,00,000 [Return on Investment: 15%; Earning Per Share: Rs.7.20]
Reserves 2,30,000
Profit & Loss Account 3,00,000 Q-43: Calculate Return on Investment and Earning Per Share from the following:
Net Profit for the current Year 2,50,000 Particulars Rs.
Tax Paid 60,000 Equity Capital (25/- each) 1,00,000
Total Dividend Paid (Including Prefance Dividend) 1,70,000 10% Loan 60,000
Market Price per Equity Share 24 Reserves 40,000
[ROI: 20%; ROE: 18%; Earning Per Share: Rs.3; Dividend Per Share: Rs.2; Price Earing Ratio: 8] Plant and Machinery 36,000
Net Profit for the year (after charging 30% Income Tax) 16,800
Q-40: Calculate Return on Equity, Earning Per Share, Dividend Per Share and Price Trade Creditors 20,000
Earing Ratio from the following information : [Return on Investment: 15%; Earning Per Share: Rs.4.20]
Particulars Rs.
7% Debentures 1,50,000 Q-44: Calculate Debt Equity Ratio, Proprietary Ratio and Total Assets to Debt Ratio
10% Prefrance Share Capital 1,00,000 :
16,000 equity shares of Rs.10 each fully paid up 1,60,000 Particulars Rs.
Reserve and surplus 6,40,000 Equity Share Capital 2,00,000
Net profit after tax 1,38,000 General Reserve 70,000
Total Dividend Paid (Including Prefance Dividend) 60% of Net Profit Accumulated Profits 50,000
Market Price per Equity Share 60 10% Debentures 1,50,000
[ROE: 16%; Earning Per Share: Rs.8; Dividend Per Share: Rs.4.55; Price Earing Ratio: 7.5] Current liabilities 75,000
Preliminary Expenses 20,000
Q-41: Calculate Earning Per Share, Dividend Per Share, Price Earning Ratio Return [Debt Equity Ratio 0.5 : 1; Proprietary Ratio 0.57 : 1; Total Assets to Debt Ratio: 3.5 Times]
on Equity (ROE) and Return on Investment (ROI) from the following :
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Long-term Loan 1,10,000

CA. Naresh Aggarwal’s General Reserve 50,000
ACADEMY of ACCOUNTS [Debt Equity Ratio 1.3 : 1; Current Ratio 1.5 : 1]

Accounting • Costing • Taxation • Financial Management Q-48: Calculate Debt Equity Ratio, Total Asset to Debt Ratio and Proprietary Ratio
West Patel Nagar, New Delhi. Ph:8800215448. Website: www.academyofaccounts.org from the following data:
Particulars Rs.
Q-45: Calculate the Debt Equity Ratio and Total Assets to Debt Ratio : Equity Share Capital 75,000
Particulars Rs. Reserve and Surplus 20,000
Share Capital 1,50,000 Debentures 40,000
Bills Payable 21,000 Loan from ICICI 30,000
Creditors 30,000 Current Liabilities 15,000
Debentures 2,75,000 Fixed Assets 1,30,000
Debtors 95,000 Goodwill 48,000
Bank Balances 45,000 Current Assets 50,000
Long Term Loans 1,00,000 [Debt Equity Ratio 0.74 : 1; Total Assets to Debt Ratio 2.57 : 1; Proprietary Ratio 0.53 : 1]
General Reserve 19,000

AoA
Q-49: On the basis of following information, calculate :
[Debt Equity Ratio 2.2 : 1; Total Assets to Debt Ratio 1.59 : 1] (i) Gross Profit Ratio, (ii) Working Capital Turnover Ratio, (iii) Debt Equity Ratio
Particulars Rs.
Q-46: From the following information calculate the Debt Equity Ratio, Total Assets to Net Sales 30,00,000
Debt Ratio, Proprietary Ratio and Current Ratio : Cost of Goods Sold 20,00,000
Particulars Rs. Current Assets 6,00,000
Debentures 1,40,000 Current Liabilities 2,00,000
Long Term Loans 70,000 Paid up share capital 5,00,000
Bank Balances 30,000 Debentures 2,50,000
Debtors 70,000 Loan 1,25,000
General Reserve 40,000 [(i): 33.33%; (ii): 5 Times; (iii): 0.75 : 1]
Creditors 6,000
Share Capital 1,35,000 Q-50: With the help of the given information calculate the following ratios :
Bills Payable 44,000 (i) Operating Ratio (ii) Quick Ratio
Preliminary Expenses 15,000 (iii) Stock Turnover Ratio (iv) Proprietary Ratio
[Debt Equity Ratio 21 : 16; Total Assets to Debt Ratio 2 : 1; Particulars Rs.
Proprietary Ratio 0.38 : 1; Current Ratio 2 : 1] Sales 5,00,000
Opening Stock 40,000
Q-47: Calculate the Debt Equity Ratio and Current Ratio : Purchases 2,30,000
Particulars Rs. Carriage Inwards 10,000
Share Capital 2,50,000 Closing Stock 60,000
Bills Payable 15,000 Equity Share Capital 4,00,000
Creditors 45,000 Securities Premium 30,000
Debtors 60,000 General Reserve 10,000
12% Debentures 2,80,000 Other Current Assets 1,10,000
Bank Balance 30,000 Current Liabilities 1,80,000
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Purchases 5,00,000
CA. Naresh Aggarwal’s Wages 30,000
ACADEMY of ACCOUNTS Closing Stock
Selling and Distribution Expenses
52,000
6,000
Accounting • Costing • Taxation • Financial Management Other Current Assets 2,00,000
West Patel Nagar, New Delhi. Ph:8800215448. Website: www.academyofaccounts.org Current Liabilities 1,50,000
[(i): 66.5%; (ii): 1.68 : 1; (iii): 10.5 : 1; (iv): 0.25 : 1]

Fixed Assets 3,50,000

Q-54: From the following information calculate the following ratios :
Operating Expenses 25,000
(i) Debt Equity Ratio (ii) Return on Investments
[(i): 49%; (ii): 0.61 : 1; (iii): 4.4 Times; (iv): 0.85 : 1]
(iii) Return on Equity (iv) Interest Coverage Ratio
Particulars Amount
Q-51: From the following information, calculate the following ratios :
Share Capital 1,60,000
(i) Gross Profit Ratio (ii) Working Capital Turnover Ratio
General Reserve 60,000
(iii) Total Assets to Debt Ratio (iv) Proprietary Ratio
Profit & Loss Account 1,00,000
Particulars Rs.
15% Loan 2,00,000
Net Sales 20,00,000
Sales for the year 5,60,000

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Cost of Goods Sold 12,00,000
Tax paid during the year 20,000
Current Assets 6,00,000
Profit for the current year after Interest and Tax 80,000
Current Liabilities 3,00,000
[(i) 1 : 1.6; (ii) 25%; (iii) 25%; (iv) 4.33 Times]
Paid up Share Capital 8,00,000
12% Debentures 4,00,000
Q-55: From the following information calculate :
[(i): 40%; (ii): 4 Times; (iii): 3.75 : 1; (iv): 0.53 : 1]
(i) Stock Turnover Ratio (ii) Operating Ratio Ratio
(iii) Operating Profit Ratio
Q-52: Calculate any two of the following ratios from the given information :
Particulars Amount
(i) Gross Profit Ratio (ii) Stock Turnover Ratio
Opening stock 28,000
(iii) Proprietary Ratio (iv) Operating Ratio
Closing stock 22,000
Net Sales Rs.4,00,000; Cost of goods sold Rs.2,00,500; Administration expenses
Purchases 46,000
Rs.45,000; Selling expenses Rs.57,000; Share capital Rs.8,50,000; Reserves and
Sales 90,000
Surplus Rs.3,00,000; Long-term loans Rs.8,20,000; Fixed assets (net) Rs.4,62,000;
Sales Returns 10,000
Investments Rs.2,42,500; Debtors Rs.72,000; Opening stock Rs.2,40,000; Closing
Carriage inwards 4,000
stock Rs.2,10,000; Bank Balance Rs. 3,00,000.
Office expenses 4,000
[(i): 49.88%; (ii): 0.89 Times; (iii): 0.89 : 1; (iv): 75.63%]
Selling & Distribution Expenses 2,000
[(i) 2.24 times; (ii) 77.5 %; (iii) 22.5%]
Q-53: With the help of the given information calculate the following ratios:
(i) Operating Ratio (ii) Current Ratio
Q-56: From the following information, calculate Stock Turnover ratio, Operating ratio
(iii) Stock Turnover Ratio (iv) Debt Equity Ratio,
and Gross Profit ratio :
Particulars Rs.
Particulars Rs.
Equity Share Capital 5,00,000
Opening stock 28,000
9% Preference Share Capital 4,00,000
Closing stock 22,000
12% Debentures 2,40,000
Purchases 46,000
General Reserve 60,000
Sales 90,000
Sales 8,00,000
Sales Returns 10,000
Opening Stock 48,000
 (17) (18)

Q-58: Current Liabilities of a company are Rs.1,50,000. Its Current Ratio is 3 : 1 and
CA. Naresh Aggarwal’s Quick Ratio is 1 : 1. Calculate the value of stock in trade.
ACADEMY of ACCOUNTS [Rs. 3,00,000]

Accounting • Costing • Taxation • Financial Management Q-59: Current Liabilities Rs.60,000; Liquid Ratio is 1.5 ; Current Ratio is 2.5. Calculate
West Patel Nagar, New Delhi. Ph:8800215448. Website: www.academyofaccounts.org stock in trade.
[Rs . 60,000]
Carriage inward 4,000
Q-60: Current Assets of a company are Rs.2,50,000. Its Current Ratio is 2.5 : 1 and
Office expenses 4,000
Quick Ratio is 1 : 1. Calculate Stock.
Selling & Distribution Expenses 2,000
[Rs. 1,50,000]
Capital Employed 2,00,000
[Stock Turnover Ratio: 2.24 Times; Operating Ratio: 77.57%; Gross Profit Ratio: 30%]
Q-61: A firm has a Current Ratio of 3 : 1. Its net Working Capital is Rs.3,00,000. Its
Quick Ratio is 2.5 : 1. Calculate Stock.
Q-57: The following are the summarised Profit and Loss account of Hindustan Products
[Rs. 75,000]
for the year ended 31.03.2006 and the Balance Sheet of the company as on that date:
Trading and Profit & Loss Account
Q-62: A business has Current Ratio 3 : 1 and Quick Ratio 1.2 : 1. If the Working

AoA
Particulars Amount Particulars Amount Capital is Rs.90,000. Calculate Stock.
[Rs. 81,000]
To Opening Stock 1,00,000 By Sales 8,00,000
To Purchases 4,50,000 By Stock 1,80,000
Q-63: X Ltd. has a Liquid (Acid Test) Ratio 2 : 1. If its stock is Rs.20,000 and its total
To Direct Expenses 1,90,000
current liabilities are Rs.50,000; find out its Current Ratio.
To Gross Profit c/d 2,40,000 .
[Current Ratio 2.4 : 1]
9,80,000 9,80,000
Q-64: X Ltd. has a Current Ratio of 4.5 : 1 and Acid Test Ratio of 3 : 1. If its inventory
To Selling and Distribution Exp. 1,00,000 By Gross Profit b/d 2,40,000
is Rs.24,000, find out its total current liabilities.
To Loss on sale of Fixed Assets 60,000
[Rs.16,000]
To Net Profit 80,000
2,40,000 2,40,000 Q-65: Working Capital of a company is Rs.1,80,000. Total Debts are Rs.3,90,000
and Long-Term Debt are Rs.3,00,000. Calculate Current ratio.
Balance Sheet
[ 3 : 1]
Liabilities Amount Assets Amount Hint: Current Liabilities or Short Term Debt = Total Debts - Long Term Debts
Equity Share Capital 2,90,000 Land 2,20,000
Q-66: Working capital of ABC Pvt. Ltd. is Rs.60,000. Total Debts are Rs.1,30,000
Profit and Loss A/c 60,000 Stock 1,80,000
and Long-term Debts are Rs.1,00,000. Stock is of Rs.25,000, Prepaid Expenses are
Creditors 1,15,000 Debtors 50,000
Rs.5,000. Calculate Current Ratio & Quick Ratio.
Outstanding Expenses 15,000 Cash 30,000
[Current Ratio: 3 : 1; Quick Ratio: 2 : 1]
4,80,000 4,80,000
Q-67: India Ltd. has Current Ratio of 4.5 : 1 and Quick Ratio of 3 : 1. Its inventory is
Calculate the following ratios:
of Rs.72,000. Find out its Current Assets, Current Liabilities and Quick Assets.
(i) Current Ratio (ii) Stock Turnover Ratio
[Current Assets: Rs.2,16,000; Current Liabilites: Rs. 48,000; Quick Assets: Rs. 1,44,000]
(iii) Gross Profit Ratio (iv) Operating Ratio
(v) Operating Profit Ratio
Q-68: Bharat Ltd. has a Current Ratio of 4 : 1 and its Liquid Ratio is 3 : 1. If its
[(i): 2 : 1; (ii): 4 Times; (iii): 30%; (iv): 82.5%; (v) 17.5%]
inventory is Rs.36,000 Find the value of total current assets; total quick assets and
 (19) (20)

Sales : Rs.1,80,000
CA. Naresh Aggarwal’s Closing Stock is Rs 15,000 in excess of Opening Stock
ACADEMY of ACCOUNTS [Opening Stock: Rs.16,500; Closing Stock: Rs.31,500]

Accounting • Costing • Taxation • Financial Management Q-76: Calculate the amount of the Opening Debtors and Closing Debtors from the
West Patel Nagar, New Delhi. Ph:8800215448. Website: www.academyofaccounts.org following figures:
Debtors Turnover Ratio 4 Times
Cost of Goods sold Rs.6,40,000
total current liabilities.
Gross Profit Ratio 20%
[Current Liabilities: Rs.36,000; Current Assets: Rs.1,44,000; Quick Assets: Rs.1,08,000]
Cash Sales 331/3% of Credit Sales
Closing Debtors were Rs.20,000 more than at the beginning.
Q-69: A Ltd. has a Current Ratio of 3 : 1. Its Quick Ratio is 1 : 1. The value of Stock
[Opening Debtors: Rs.1,40,000; Closing Debtors: Rs.1,60,000]
is Rs.30,000. Calculate the total current liabilities.
[Rs.15,000]
Q-77: Following Figures have been extracted from the Shivalika Mills Limited :
Stock in the beginning of the year Rs.60,000
Q-70: A firm has a Current Ratio of 4.5 : 1 and a Quick Ratio of 3 : 1. If its inventory
Stock at the end of the year Rs.1,00,000
is Rs. 36,000, find its total current assets and total current liabilities.
Stock turnover ratio 8 times
[Current Liabilities Rs. 24,000; Current Assets Rs. 1,08,000]

AoA
Selling Price 25% above cost.
Compute the amount of gross profit and sales.
Q-71: Calculate Current Liabilities, Current Assets and Quick Assets, if inventories
[Gross Profit: Rs.1,60,000; Sales: Rs.8,00,000]
are Rs.1,50,000. Current Ratio is 4 times and Liquid Ratio is 2.5 times.
[Current Liabilities: Rs.1,00,000; Current Assets: Rs.4,00,000; Quick Assets: Rs.2,50,000]
Q-78: Average stock carried by a trader is Rs. 60,000. Stock Turnover Ratio is 10
times. Goods are sold at a profit of 10% on cost. Find out the profit.
Q-72: A trader carries an average stock Rs. 40,000 (cost). His Stock Turnover is 8
[Rs. 60,000]
times. If he sells goods at a profit of 20% on sales, find out his profit.
[Rs. 80,000]
Q-79: Find out the value of sales if:
Average Stock Rs.1,60,000
Q-73: From the following information determine the opening and closing stock.
Gross Profit Rs.1,20,000
Stock Turnover Ratio 5 times
Stock Turnover Ratio 6 Times
Total Sales Rs. 2,00,000
[Rs. 10,80,000]
Rate of Gross Profit 25% on Sales
Closing Stock is more by Rs. 4,000 than the opening stock.
Q-80: Compute the amount of Gross Profit and sales if :
[Opening Stock Rs. 28,000; Closing Stock Rs. 32,000]
Opening stock Rs.60,000
Closing Stock Rs.1,00,000
Q-74: From the following details, calculate (i) Opening Stock (ii) Closing Stock:
Stock Turnover Ratio 8 times
Stock Turnover Ratio 6 times
Profit 20% on sales
Gross Profit 25% on Cost
[Gross profit Rs.1,60,000; Sales Rs.8,00,000]
Sales 1,80,000
Closing stock is Rs. 15,000 in excess of Opening Stock.
Q-81: From the following details, calculate the value of opening stock:
[Opening Stock 16,500; Closing Stock 31,500]
Closing Stock Rs.68,000
Total Sales (including Cash Sales Rs. 1,20,000) Rs.4,80,000
Q-75: From the following details, calculate opening stock and closing stock:
Total Purchases (including Credit Purchases Rs. 2,93,200) Rs.3,60,000
Stock Turnover Ratio : 6 Times
Goods are sold at a profit of 25% on cost.
Gross Profit : 20% on Sales
[Rs.92,000]
 (21) (22)

Q-88: Calculate current ratio from the following :

CA. Naresh Aggarwal’s Working Capital is Rs.2,50,000
ACADEMY of ACCOUNTS Bills Payable are Rs.50,000
Sundry Creditors are Rs.75,000
Accounting • Costing • Taxation • Financial Management [3 : 1]
West Patel Nagar, New Delhi. Ph:8800215448. Website: www.academyofaccounts.org
Q-89: Calculate the amount of closing debtors from the following data :
Total Sales Rs. 25,00,000
Q-82: ABC Pvt. Ltd. has cost of goods sold amounted to Rs. 2,10,000 and Inventory Cash Sales Rs. 12,22,500
Turnover Ratio is 6 times. Stock at the beginning is 1.5 times more than the stock at Credit Collection Period 52 days
the end. Calculate the values of Opening and Closing stocks. Debtors at the beginning of the year Rs. 1,74,000
[Opening Stock Rs. 50,000; Closing Stock Rs. 20,000] [Debtors Turnover Ratio: 7 Times; Closing Debtors: Rs.1,91,000]

Q-83: India Ltd. has cost of goods sold amounted to Rs. 1,50,000 its Inventory Turnover Q-90: Calculate Current Assets of a company from the following information:
Ratio is 10 times. Stock at the beginning is 2 times more than the stock at the end. (i) Stock Turnover Ratio 4 Times
Calculate the values of Opening and Closing stocks. (ii) Stock in end is Rs. 20,000 more than that in the beginning
[Opening Stock Rs. 22,500; Closing Stock Rs. 7,500] (iii) Sales Rs. 3,00,000

AoA
(iv) Gross Profit Ratio 25%
Q-84: From the following information, calculate Opening Stock and Closing Stock: (v) Current Liabilities Rs. 40,000
Stock Turnover 6 times (vi) Quick Ratio 0.75
Gross profit was Rs.80,000 which was 20% of sales [Rs. 96,250]
Closing stock was Rs.15,000 more than opening stock.
[Opening Stock: Rs.45,833; Closing Stock: Rs.60,833] Q-91: Calculate Current Assets of a company from the following information :
(i) Stock Turnover is 5 Times
Q-85: From the following information, calculate Opening Stock and Closing Stock: (ii) Stock at end is Rs. 15,000 more than that stock in the beginning
Rs.2,00,000 is the cost of goods sold. (iii) Sales Rs. 2,00,000
Inventory Turnover is 8 times. (iv) Gross Profit Ratio 25%
Stock at the beginning is 1.5 times of the stock at the end. (v) Current Liabilities Rs. 50,000
[Opening Stock: Rs.30,000; Closing Stock: Rs.20,000] (vi) Quick Ratio 0.75
[Rs.75,000]
Q-86: Calculate debtors in the beginning, and at the end of the year.
Net credit sales during the year were Rs.1,80,000. Q-92: The ratio of current assets (Rs.4,50,000) to current liabilities (Rs.3,00,000) is
Debtors Turnover ratio is 4 times. 1.5 : 1. The accountant of the firm is interested in maintaining a current ratio of
Closing debtors are two times in comparison to opening debtors. 2 : 1, by paying off a part of the current liabilities. Compute the amount of current
[Opening Debtors: Rs.30,000; Closing Stock: Rs.60,000] liabilities that should be paid, so that the current ratio at the level of 2 : 1 may be
maintained.
Q-87: Calculate the Gross Profit Ratio based on the following information : [Rs.1,50,000]
Cash Sales 25% of Total Sales
Purchases Rs.2,76,000 Q-93: Net Profit Ratio of a company was 20%. Its indirect expenses were Rs. 75,000
Credit Sales Rs.2,40,000 and cash sales were Rs. 3,00,000. The credit sales was 80% of the total sales.
Excess of Closing Stock over Opening Stock Rs. 20,000. Calculate the Gross Profit Ratio of the company.
[20%] [25%]
 (23) (24)

CA. Naresh Aggarwal’s (c) Payment to Creditors Rs. 1,000.

ACADEMY of ACCOUNTS (d)

(e)
Selling Expenses Rs. 800.
Cash Sales Rs. 10,000.
Accounting • Costing • Taxation • Financial Management (f) Purchase Returns Rs. 100.
West Patel Nagar, New Delhi. Ph:8800215448. Website: www.academyofaccounts.org [(a) Increase; (b) Increase; (c) No Change; (d) Increase; (e) Decrease; (f) Decrease]

Q-99: State with reasons whether the operating ratio of a company will increase,
Q-94: Gross profit Ratio of a company was 25%. Its indirect expenses were Rs.50,000
decrease or not change due to the following transactions :
and Cash sales were Rs.2,00,000. The credit sales was 75% of the total sales.
(i) Paid wages Rs. 1000.
Calculate the Net Profit ratio of the company.
(ii) Issued Rs. 1,00,000 12% debentures.
[18.75%]
(iii) Sold goods on credit Rs. 15,000.
(iv) Paid Rs. 5,000 commission on sales.
Q-95: The Debt Equity Ratio of X Ltd. is 1 : 2. Which of the following would increase,
(v) Paid Rs. 4,000 for advertisement.
decrease or not change the Debt Equity Ratio:
[(a) Increase; (b) No Change; (c) Decrease; (d) Increase; (e) Increase]
(a) Issue of Equity Shares
(b) Sale of goods on cash basis,
(c) Cash received from Debtors

AoA
(d) Redemption of Debentures
(e) Purchases of goods on credit.
[(a) Decrease; (b) Decrease, if there is profit; (c) No Change; (d) Decrease; (e) No Change]
••••••••••••••••••••••
Q-96: The Debt Equity Ratio of Y Ltd. is 3 : 2. Which of the following would increase,
decrease or not change the Debt Equity Ratio :
(a) Issue of Equity Shares
(b) Sale of goods on cash basis,
(c) Cash received from Debtors
(d) Redemption of Debentures
(e) Purchases of goods on credit.
[(a) Decrease; (b) Decrease, if there is profit; (c) No Change; (d) Decrease; (e) No Change]

Q-97: The Current Ratio of Best Trading Ltd. is 2 : 1. Which of the following would
increase, decrease or not change the Current Ratio :
(a) Paid to Creditors
(b) Sale of goods for cash at a Loss of Rs.1,000.
(c) Cash received from Customers
(d) Bills Receivable Dishonored
(e) Purchases of goods on credit.
[(a) Increase; (b) Decrease; (c) No Change; (d) No Change; (e) Decrease]

Q-98: The Operating Ratio of a company is 80%. State, giving reasons, which of the
following transactions will : Increase, Decrease or Not alter the operating ratio:
(a) Credit Purchase of Goods Rs. 5,000.
(b) Sales Returns Rs. 200.
 (25) (26)

CA. Naresh Aggarwal’s C. Profitability Ratios:

ACADEMY of ACCOUNTS 1 . Gross Profit Ratio = Gross Profit . x 100

Net Sales / Revenue from Operation
Accounting • Costing • Taxation • Financial Management
West Patel Nagar, New Delhi. Ph:8800215448. Website: www.academyofaccounts.org 2 . Net Profit Ratio = Net Profit . x 100
Net Sales / Revenue from Operation

3. Operating Ratio or Operating Profit x 100

Formulae for Ratio Analysis Operating Expenses Ratio
=
Net Sales / Revenue from Operation

A. Liquidity Ratios: 4. Operating Ratio or = Total Operating Expenses x 100

Operating Expenses Ratio Net Sales / Revenue from Operation
1 . Current Ratio = Current Assets .
Current Liabilities 5. Return on Investment (ROI) or = Net Profit before Interest, Tax and Dividend x 100
Return on Capital Employed Capital Employed
2. Quick/Liquid Ratio or = Quick Assets . or Quick Assets .
Acid Test Ratio Current Liabilities Quick Liabilities 6. Earning Per Share = Net Profit after Interest, Tax and Preference Dividend .

AoA
Numbers of Equity Shares
B. Turnover / Activity Ratios:
7. Dividend Per Share = Equity Dividend Paid during the year .
1. Fixed Assets Turnover Ratio = Sales / Cost of Goods Sold . Numbers of Equity Shares
Net Fixed Assets
8. Price Earning Ratio = Market Price per Equity Share .
2. Current Assets Turnover Ratio = Sales / Cost of Goods Sold . Earning Per Share
Current Assets
D. Solvency Ratios:
3. Working Capital Turnover Ratio = Sales / Cost of Goods Sold .
Working Capital 1. Debt Equity Ratio = Debt (i.e. Long Term Loans) .
Equity (i.e. Shareholder's Fund)
4. Stock Turnover Ratio = Cost of Goods Sold / Cost of Revenue from Operation ..
Average Stock / Inventory 2. Total Assets to Debt Ratio = Total Assets .
Debt (i.e. Long Term Loans)
5. Debtors Turnover Ratio = Net Credit Sales .
Average Account Receivable 3. Proprietary Ratio = Proprietor's Fund (i.e. Shareholder's Fund) .
Total Assets
6. Creditors Turnover Ratio = Net Credit Purchases .
Average Account Payable 4. Interest Coverage Ratio = Net Profit before Interest, Tax and Dividend .
Interest on Long Term Debt / Debentures
7. Average Collection Period = 365 / 12 / 52 .
Debtors Turnover Ratio

8. Average Payment Period = 365 / 12 / 52 . Other Formulae

Creditors Turnover Ratio
1. Current Assets = Cash + Bank + Debtors + B/R + Stock + O/s Incomes +
Prepaid Expenses + Marketable Securities +
Short Term Loans & Advances (given)
 (27) (28)

17*. Operating Profit = Net Profit - Non Operating Incomes + Non Operating Expenses
2. Current Liabilities CA. Naresh
= Bank OverdraftAggarwal’s
+ Creditors+ B/P + O/s Expenses + + Interest + Tax
ACADEMY of ACCOUNTS
Advance Incomes + Provision for Taxation + Proposed Dividend
+ Short Term Loans (taken)
or Gross Profit - Other Operating Expenses

Accounting • Costing • Taxation • Financial Management 18. Total Operating Expenses = Cost of Goods Sold + Other Operating Expenses
3. West
QuickPatel
Assets = Current
Nagar, New Delhi. Assets - Stock
Ph:8800215448. - Prepaid
Website: Expenses
www.academyofaccounts.org or Sales - Operating Profit

4*. Quick Liabilities = Current Liabilities - Bank Overdraft - Cash Credit 19. Other Operating Expenses = Office & Administration Expenses + Selling & Distribution Exp.

5. Cost of Goods Sold = Sales - Gross Profit or Opening Stock + Purchases + 20. Equity Dividend Paid = Total Dividend Paid - Preference Dividend Paid
Direct Expenses - Closing Stock or Paid up Value per Equity Share x Dividend Rate

6. Equity Fund = Equity Share Capital + Reserve & Surplus - Fictitious Assets 21. Total Assets = Fixed Assets + Investments + Current Assets
or Total Liabilities - Fictitious Assets
7. Shareholder's Fund / Equity= Equity Fund + Preference Share Capital or Debt + Equity + Current Liabilities

8. Capital Employed = Total Shareholder's Fund + Long Term Loans 22. INCOME STATEMENT

AoA
or Fixed Assets + Working Capital (1) SALES
Less: Cost of Goods Sold
9. Fictitious Assets = Preliminary Expenses + Underwriting Commission + (2) GROSS PROFIT
Discount on issue of Shares / Debentures Less: Operating Expenses
(3) OPERATING PROFIT
10. Net Fixed Assets = Total Fixed Assets - Depreciation Less: Non Operating Expenses
Add: Non Operating Incomes
11. Working Capital = Current Assets - Current Liabilities (4) PROFIT before INTEREST and TAX
Less: Interest
12. Average Stock = Opening Stock + Closing Stock (5) PROFIT after INTEREST before TAX
2 Less: Tax
(6) NET PROFIT or PROFIT after TAX
13. Average A/c Receivable = Opening Debtors + Closing Debtors + Opening B/R + Closing B/R Less: Preference Dividend
2 (7) PROFIT FOR EQUITY SHAREHOLDERS
or Debtors + B/R Equity Dividend Paid
(8) PROFIT SHOWN IN THE BALANCE SHEET
14. Average A/c Payable = Opening Creditors + Closing Creditors + Opening B/P + Closing B/P
2
23. Balance Sheet
or Creditors + B/P
Liabilities Amt. Assets Amt.
15. Net Credit Sales = Total Sales - Cash Sales - Sales Return Equity Share Capital 10,000 Fixed Assets 15,000
or Total Credit Sales - Sales Return Pref. Share Capital 8,000 Investments 5,000
Reserve & Surplus 3,000 Current Assets 6,000
16. Net Credit Purchase = Total Purchase - Cash Purchase - Purchase Return Long Term Loans 4,000 Fictitious Assets 1,000
or Total Credit Purchase - Purchase Return Current Liabilities 2,000

27,000 27,000
 (29)

CA. Naresh Aggarwal’s

Theoretical Questions
ACADEMY of ACCOUNTS
Accounting • Costing • Taxation • Financial Management
Q-1*: What is meant by Ratio Analysis ?
West Patel Nagar, New Delhi. Ph:8800215448. Website: www.academyofaccounts.org
Q-2: Explain the three types of presentation of ratios.

Q-3*: Write advantages of Ratio Analysis.

Q-4*: Explain briefly the meaning and significance of the following ratios :
(a) Current Ratio
(b) Quick Ratio
(c) Stock Turnover Ratio
(d) Debtors Turnover Ratio
(e) Working Capital Ratio
(f) Operating Ratio

AoA
(g) Gross Profit Ratio
(h) Debt-Equity Ratio
(i) Proprietary Ratio
(j) Debt to Total Assets Ratio

Q-5: What are the categories under which the various ratios are grouped on the
basis of objectives ?

Q-6: Give any three examples each of current assets and current liabilities.

Q-7: What are the objectives of calculating Solvency Ratios ?

Q-8: What does Debt Equity Ratio indicate ?

Q-9: Give the purpose of Operating Ratio.

•••••••••••••••••••••••••