1.

On the basis of the following information, calculate Total Assets to Debt Ratio:
Particulars
` Particulars `
Capital Employed 50,00,000 Share Capital 35,00,000
Current Liabilities 20,00,000 10% Debentures 10,00,000
Land and Building 60,00,000 General Reserve 3,00,000
Trade Receivable 4,00,000 Surplus, i.e., Balance in Statement of
Cash and Cash Equivalents 5,00,000 Profit & Loss 2,00,000
Investment (Trade) 1,00,000

[Ans.: Total Assets to Debt Ratio = 7 : 1.]

[Hint: Long-term Debts = Capital Employed – Shareholders’ Funds.]

2. From the following information, calculate Proprietary Ratio:

BALANCE SHEET OF FORTUNE LTD. as at 31st March, 2022

Particulars Note No. `

I. EQUITY AND LIABILITIES

1. Shareholders’ Funds
(a) Share Capital 6,00,000
(b) Reserves and Surplus 1,50,000
2. Current Liabilities
(a) Trade Payables 1,00,000
(b) Other Current Liabilities 50,000
(c) Short-term Provisions (Provision for Tax) 1,00,000
Total 10,00,000
II. ASSETS
1. Non-Current Assets
Property, Plant and Equipment and Intangible Assets:
Property, Plant and Equipment 5,00,000
2. Current Assets
(a) Current Investments 1,50,000
(b) Inventories 1,00,000
(c) Trade Receivables 1,50,000
(d) Cash and Cash Equivalents 1,00,000
Total 10,00,000

[Ans.: Proprietary Ratio = 0.75 : 1 or 75%.]

3. Calculate Current Ratio, Quick Ratio and Debt to Equity Ratio from the information given below:
Particulars `
Inventory 30,000
Prepaid Expenses 2,000
Other Current Assets 50,000
Current Liabilities 40,000
12% Debentures 30,000
Accumulated Profits 10,000
Equity Share Capital 1,00,000
Non-current Investments 15,000

[Ans.: Current Ratio = 2.05 : 1; Quick Ratio = 1.25 : 1; Debt to Equity Ratio = 0.27 : 1.]

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 4. Calculate Inventory Turnover Ratio from the data given below:
` `
Inventory in the beginning of the year 20,000 Carriage Inwards 5,000
Inventory at the end of the year 10,000 Revenue from Operations, i.e., Net Sales 1,00,000
Purchases 50,000
State the significance of this ratio.

[Ans.: Inventory Turnover Ratio = 4.33 Times.]

5. From the following information, calculate any two of the following ratios:
(i) Current Ratio; (ii) Debt to Equity Ratio; and (iii) Operating Ratio.
Revenue from Operations (Net Sales) ` 1,00,000; Cost of Revenue from Operations (Cost of Goods Sold)
was 80% of sales; Equity Share Capital ` 7,00,000; General Reserve ` 3,00,000; Operating Expenses
` 10,000; Quick Assets ` 6,00,000; 9% Debentures ` 5,00,000; Closing Inventory ` 50,000; Prepaid
Expenses ` 10,000 and Current Liabilities ` 4,00,000. (Foreign 2008)

[Ans.: Current Ratio = 1.65 : 1; Debt to Equity Ratio = 0.5 : 1; Operating Ratio = 90%.]

6. State, giving reasons, which of the following transactions would improve, reduce or not change the
Current Ratio, if Current Ratio of a company is (i) 1 : 1; or (ii) 0.8 : 1:
(a) Cash paid to Trade Payables.
(b) Purchase of Stock-in-Trade on credit.
(c) Purchase of Stock-in-Trade for cash.
(d) Payment of Dividend payable.
(e) Bills Payable discharged.
(f ) Bills Receivable endorsed to a Creditor.
(g) Bills Receivable endorsed to a Creditor dishonoured.
[Ans.: (i) (a) No Change; (b) No Change; (c) No Change; (d) No Change; (e) No Change;
(f) No Change; (g) No Change; (ii) (a) Reduce; (b) Improve; (c) No Change;
(d) Reduce; (e) Reduce; (f) Reduce; (g) Improve.]

7. Calculate Inventory Turnover Ratio in each of the following alternative cases:

Case 1: Cash Sales 25% of Credit Sales; Credit Sales ` 3,00,000; Gross Profit 20% on Revenue from
Operations, i.e., Net Sales; Closing Inventory ` 1,60,000; Opening Inventory ` 40,000.
Case 2: Cash Sales 20% of Total Sales; Credit Sales ` 4,50,000; Gross Profit 25% on Cost; Opening
Inventory ` 37,500; Closing Inventory ` 1,12,500. [Ans.: Case (1) 3 Times; Case (2) 6 Times.]

[Hint: Profit 25% of Cost = Profit 20% on Sales. Profit on Cost = 25/100 or 1/4 or 25%.

Let the Cost = ` 100; Profit = ` 25; Revenue from Operations, i.e., Net Sales = ` 125.

Profit on Sales = ` 25/` 125 = 1/5 or 20%.]

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 8. From the following Statement of Profit & Loss for the year ended 31st March, 2022 of Rex Ltd., calculate
Inventory Turnover Ratio:
STATEMENT OF PROFIT & LOSS for the year ended 31st March, 2022
Particulars Note No. `
I. Revenue from Operations (Net Sales) 6,00,000
II. Expenses:
(a) Purchases of Stock-in-Trade 3,00,000
(b) Change in Inventory of Stock-in-Trade 1 50,000
(c) Employees Benefit Expenses 60,000
(d) Other Expenses 2 45,000
Total Expenses 4,55,000
III. Profit before Tax (I – II) 1,45,000
IV. Less: Tax 45,000
V. Profit after Tax (III – IV) 1,00,000

Notes to Accounts
Particulars `
1. Change in Inventory of Stock-in-Trade
Opening Inventory 1,25,000
Less:  Closing Inventory 75,000
50,000
2. Other Expenses
Carriage Inwards 15,000
Miscellaneous Expenses 30,000
45,000

[Ans.: Inventory Turnover Ratio = 3.65 Times.]

[Hint: Cost of Revenue from Operations (Cost of Goods Sold) = Purchases of Stock-in-Trade + Change
in Inventory of Stock-in-Trade + Carriage Inwards = ` 3,65,000.]
9. From the following particulars, determine Trade Receivables Turnover Ratio:
`
Revenue from Operations (Net Sales) 20,00,000
Credit Revenue from Operations (Credit Sales) 16,00,000
Trade Receivables 2,00,000
[Ans.: Trade Receivables Turnover Ratio = 8 Times.]
10. Following is the Balance Sheet of the Bharati Ltd. as at 31st March, 2022:
Particulars Note No. `
I. EQUITY AND LIABILITIES
1. Shareholders’ Funds
(a) Share Capital 7,50,000
(b) Reserves and Surplus:
Surplus, i.e., Balance in Statement of Profit & Loss:
Opening Balance 6,30,000
Add:  Transfer from Statement of Profit & Loss 14,58,000 20,88,000
2. Non-Current Liabilities
15% Long-term Borrowings 24,00,000
3. Current Liabilities 12,00,000
Total
64,38,000

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 II. ASSETS
1. Non-Current Assets

(a) Property, Plant and Equipment and Intangible Assets:

—Property, Plant and Equipment
27,00,000
(b) Non-current Investments:
(i) 10% Investments 3,00,000
(ii) 10% Non-trade Investments 1,80,000
2. Current Assets
32,58,000
Total
64,38,000

You are required to calculate Return on Investment for the year ended 31st March, 2022 with reference
to Opening Capital Employed. [Ans.: Return on Investment (ROI) = 50%.]

[Hint: 10% Investments are Trade Investments.]

11. From the following information of Green Star Ltd., Calculate Debt to Equity Ratio:
` `
Trade Payables 3,00,000 Trade Receivables 3,00,000
Other Current Liabilities (12.5% of Current Assets) Net Fixed Assets 30,00,000
Total Debts 28,00,000 Long Term Loans and Advances 1,60,000
Other Quick Assets 80,000 Non-Current Investments 40,000
Prepaid Expenses 20,000 Opening Inventory 3,20,000

Note: Closing Inventory 25% more than Opening Inventory.

[Ans.: Debt to Equity Ratio = 2 : 1.]

[Hint: (i) Closing Inventory = ` 4,00,000; (ii) Current Assets = ` 8,00,000; (iii) Current Liabilities = ` 4,00,000;
(iv) Total Assets = ` 40,00,000; (v) Equity = Total Assets – Total Debts = ` 12,00,000; (vi) Long-term
Debts = ` 24,00,000.]

12. Calculate Revenue from Operations of King Ltd. from the following information:

Current Assets ` 20,00,000; Quick Ratio is 1.5 : 1; Current Ratio is 2 : 1; Inventory Turnover Ratio is
6 Times; Goods are sold at a profit of 25% on cost.
[Ans.: Revenue from Operations = ` 37,50,000.]

[Hint: Current Liabilities = ` 10,00,000; Quick Assets = ` 15,00,000; Inventory = ` 5,00,000; Cost of Revenue
from Operations = ` 30,00,000.]

13. Quick Ratio 1.5, Current Ratio 2, Total Current Assets ` 20,00,000, Inventory Turnover Ratio 6 Times.
Goods are sold on 20% Profit on Sales. Calculate Revenue from Operations.
[Ans.: Revenue from Operations = ` 37,50,000.]

[Hint: Current Liabilities = ` 10,00,000; Quick Assets = ` 15,00,000; Inventory = ` 5,00,000; Cost of Revenue
from Operations = ` 30,00,000.]

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 14. The motto of Yash Ltd., an advertising company is ‘Service with Dignity’. Its management and work force
is hard working, honest and motivated. The net profit of the company doubled during the year ended
31st March, 2014. Encouraged by its performance company decided to give one month extra salary to all
its employees. Following is the Comparative Statement of Profit & Loss of the company for the years ended
31st March, 2013 and 2014:

COMPARATIVE STATEMENT OF PROFIT & LOSS

Particulars Note 2012–13 2013–14 Absolute Percentage
No. ` ` Change (`) Change (%)
Revenue from Operations 10,00,000 15,00,000 5,00,000 50.00
Less: Employees Benefit Expenses 6,00,000 7,00,000 1,00,000 16.67
Profit before Tax 4,00,000 8,00,000 4,00,000 100.00
Less: Tax Rate 25% 1,00,000 2,00,000 1,00,000 100.00
Profit after Tax 3,00,000 6,00,000 3,00,000 100.00

Calculate Net Profit Ratio for the years ending 31st March, 2013 and 2014. (Delhi 2015, Modified)

Net Profit after Tax
[Ans.: Net Profit Ratio = ×100
Revenue from Operations

` 3,00 ,000
For the year ending 31st March, 2013 = ×100 = 30%;
`10 ,00 ,000
` 6 ,00 ,000
For the year ending 31st March, 2014 = 100 = 40%.]
`15 ,00 ,000

15. Wintex Products Ltd.

COMMON-SIZE STATEMENT OF PROFIT & LOSS
for the years ended 2021 and 2022
Particulars Note Absolute Amounts Percentage of Revenue from
No. Operations (Net Sales)
31st March, 31st March, 31st March, 31st March,
2021 (`) 2022 (`) 2021 (%) 2022 (%)

I. Revenue from Operations (Net Sales) 10,00,000 12,50,000 100.00 100.00

II. Expenses
(a) Purchases of Stock-in-Trade 7,20,000 8,70,000 72.00 69.60
(b) Change in Inventories of Stock-in-Trade 30,000 (20,000) 3.00 (1.60)
(c) Depreciation and Amortisation Expenses 20,000 30,000 2.00 2.40
(d) Other Expenses 30,000 50,000 3.00 4.00
Total Expenses 8,00,000 9,30,000 80.00 74.40
III. Profit before Tax (I – II) 2,00,000 3,20,000 20.00 25.60
IV. Less:  Income Tax 60,000 96,000 6.00 7.68
V. Profit after Tax (III – IV) 1,40,000 2,24,000 14.00 17.92

From the above Common-size Statement of Profit & Loss for the years ended 31st March, 2021 and
31st March, 2022, compute Gross Profit Ratio.

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 [Ans.:
Gross Profit Ratio 31st March, 2021 31st March, 2022
Gross Profit ` 2 ,50 ,000 ` 6 ,17 ,500
= ×100 = ×100 = ×100
Revenue from Operations `10 ,00 ,000 ` 7 ,50 ,000
= 25% = 32%
Gross Profit: ` `
Revenue from Operations 10,00,000 12,50,000
Less: Cost of Revenue from Operations 7,50,000 8,50,000
2,50,000 4,00,000
]