Read **TS Grewal Accountancy Class 12 Solution Chapter 4 Accounting Ratios** 2023 2024. Students should study TS Grewal Solutions Class 12 Accountancy available on Studiestoday.com with solved questions and answers. These chapter-wise answers for Class 12 Accountancy have been prepared by expert teachers of Grade 12. These TS Grewal Class 12 Solutions have been designed as per the latest accountancy TS Grewal Book for Class 12 and if practiced thoroughly can help you to score good marks in standard 12 Accounts class tests and examinations.

## Class 12 Accounts Chapter 4 Accounting Ratios TS Grewal Solutions

TS Grewal Solutions for Chapter 4 Accounting Ratios Class 12 Accounts have been provided below based on the latest TS Grewal Class 12 book. The answers have been prepared based on the latest 2023 2024 book for the current academic year. TS Grewal Solutions Class 12 will help students to improve their concepts and easily solve accountancy questions for Class 12. Class 12 Grewal solutions should be revised regularly as more practice will help you get a better rank and easily solve more questions.

### Chapter 4 Accounting Ratios TS Grewal Class 12 Solutions

About this chapter: TS Grewal Solution Class 12 Chapter 4 Accounting Ratios is a very important topic in class 12 accountancy as it explains about various types of ratios which can be used to understand the financial position of an organisation. In this chapter, various formulas for calculating ratios and the meaning of each ratio has been explained in an easy to understand manner. After explanation of each ratio lot of solved questions have been provided so that the students are able to understand the meaning of the ratios as well as the process of solving the questions relating to ratios in their exams. This is a very scoring topic as once you are able to understand the meaning of the ratios and the process to derive the ratios then you will be able to solve all types of questions and get full marks. Ratio analysis is also been done by financial consultants to understand the financial performance of company. At the end of the chapter there are lot of practical and numerical questions which have been given by the author. We have provided answers to all the questions in this chapter which will help you to understand the concepts and also understand how the ratios have to be derived in a step by step manner.

Solutions for T.S. Grewal's Analysis of Financial Statements

Textbook for CBSE Class 12 TS Grewal Solutions Class 12 Accountancy

TS Grewal Solutions Class 12 Accountancy

Chapter 4 Accounting Ratios

**Question 1. From the following compute Current Ratio:**

**Answer:**

**Question 2. Calculate Current Ratio from the following information:**

**Answer:**

**Question 3. Current Ratio is 2.5, Working Capital is Rs. 1,50,000. Calculate the amount of Current Assets and**

**Current Liabilities.**

**Answer:**

**Question 4. Working Capital is Rs. 9,00,000; Trade Payable Rs. 90,000; and Other Current Liabilities are Rs. 2,10,000. Calculate Current Ratio.**

**Answer:**

**Working Note:-**

**Question 5. Working Capital Rs. 1,80,000; Total Debts Rs. 3,90,000; Long-Term Debts Rs. 3,00,000. Calculate Current Ratio.**

**Answer:**

**Working Note:-**

**Question 6. Current Assets are Rs. 7,50,000 and Working Capital is Rs. 2,50,000. Calculate Current Ratio.**

**Answer:**

**Question 7. Trade Payable Rs. 50,000, Working Capital Rs. 9,00,000, Current Liabilities Rs. 3,00,000. Calculate Current Ratio.**

**Answer:**

**Question 8. A company had Current Assets of Rs. 4,50,000 and Current Liabilities of Rs. 2,00,000. Afterwards it purchased goods for Rs. 30,000 on credit. Calculate Current Ratio after the purchase.**

**Answer:**

**Question 9. Current Liabilities of a company were Rs. 1,75,000 and its Current Ratio was 2:1. It paid Rs. 30,000 to a Creditor. Calculate Current Ratio after payment.**

**Answer:**

**Working Note:-**

**Question 10. Ratio of Current Assets Rs. 3,00,000 to Current Liabilities Rs. 2,00,000 is 1.5:1. The accountant of the firm is interested in maintain a Current Ratio of 2:1 by paying off a part of the Current Liabilities. Compute amount of the Current Liabilities that should be paid so that the Current Ratio at the level of 2:1 may be maintained.**

**Answer:**

**Question 11. Ratio of Current Assets Rs. 8,75,000 to Current Liabilities Rs. 3,50,000 is 2:5:1. The firm wants to maintain Current Ratio of 2:1 by purchasing goods on credit. Compute amount of goods that should be purchased on Credit.**

**Answer:**

**Question 12. A firm had Current Assets of Rs. 5,00,000. It paid Current Liabilities of Rs. 1,00,000 and the Current Ratio became 2:1. Determine Current Liabilities and Working Capital before and after the payment was made.**

**Answer:**

**Question 13. State giving reason, whether the Current Ratio will improve or decline or will have no effect in each of the following transactions if Current Ratio is 2:1:**

**(a) Cash paid to Trade Payables.**

**(b) Bills Payable discharged.**

**(c) Bills Receivable endorsed to a creditor.**

**(d) Payment of final Dividend already declared.**

**(e) Purchase of Stock-in-Trade on credit.**

**(f) Bills Receivable endorsed to a Creditor dishonoured.**

**(g) Purchases of Stock-in-Trade for cash.**

**(h) Sale of Fixed Assets (Book Value of Rs. 50,000) for Rs. 45,000.**

**(i) Sale of Fixed Assets (Book Value of Rs. 50,000) for Rs. 60,000.**

**Answer:**

**(a) Cash paid to Trade Payables – we will improve the Current Ratio.**

**(b) Bills Payable discharged – will improve the Current Ratio.**

**(c) Bills Receivable endorsed to a creditor – will improve the Current Ratio.**

**(d) Payment of final Dividend already declared – will improve the Current Ratio.**

**(e) Purchase of Stock-in-Trade on credit – will decline the Current Ratio.**

**(f) Bills Receivable endorsed to a Creditor dishonored – will decline the Current Ratio.**

**(g) Purchase of Stock-in-Trade for Cash – will have no effect on the Current Ratio.**

**(h) Sale of Fixed Assets (Book Value of Rs. 50,000) for Rs. 45,000 – will improve the Current Ratio.**

**(i) Sale of Fixed Assets (Book Value of Rs. 50,000) for Rs. 60,000 – will improve the Current Ratio.**

**Question 14. 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.**

**Answer:**

**(a) Cash paid to Trade Payables**

**Reason:-**This transaction will reduce current assets or cash and current liabilities or trade payables. This can be tested by reducing both current assets and current assets and current liabilities by equal amounts say Rs. 50,000.

**Reason:-**This transaction will reduce current assets or cash and current liabilities or trade payables. This can be tested by reducing both current assets and current liabilities by equal amount say Rs. 50,000.

**(b) Purchase of Stock-in-Trade on credit**

**Reason:-**This transaction will increase current assets or Stock-in-Trade and current liabilities or creditors by same amount. This can be tested by increasing both current assets and current liabilities by equal amount say Rs. 50,000.

**Reason:-**This transaction will increase current assets or Stock-in-Trade and current liabilities or creditors by same amount. This can be tested by increasing both current assets and current liabilities by equal amount say Rs. 50,000.

**(c) Purchase of Stock-in-Trade for cash**

**Reason:-**This transaction will increase current assets or Stock-in-Trade and current assets or cash by equal amounts. This can be tested by increasing and decreasing current assets by equal amount say Rs. 50,000.

**Reason:-**This transaction will increase current assets or Stock-in-Trade and current liabilities or cash by equal amounts. This can be tested by increasing and decreasing current assets by equal amounts say Rs. 50,000.

**(d) Payment of Dividend**

**Reason:-**This transaction will reduce current assets or cash or bank and current liabilities or dividend payable. This can be tested by reducing both current assets and current liabilities by equal amounts say Rs. 50,000.

**Reason:-**This transaction will reduce current assets or cash or bank and current liabilities or dividend payable. This can be tested by reducing both current assets and current liabilities by equal amounts say Rs. 50,000.

**(e) Bills Payable discharged**

**Reason:-**This transaction will reduce current assets or cash and current liabilities or bills payable. This can be tested by reducing both current assets and current liabilities by equal amounts say Rs. 50,000.

**Reason:-**This transaction will reduce current assets or cash and current liabilities or bills payable. This can be tested by reducing both current assets and current liabilities by equal amounts say Rs. 50,000.

**(f) Bills Receivable endorsed to a Creditor**

**Reason:-**This transaction will decrease current assets or bills receivable and current liabilities or creditors. This can be tested by decreasing both current assets and current liabilities by equal amount say Rs. 50,000.

**Reason:-**This transaction will decrease current assets or bills receivable and current liabilities or creditors. This can be tested by decreasing both current assets and current liabilities by equal amount say Rs. 50,000.

**(g) Bills Receivable endorsed to a Creditor dishonoured**

**Reason:-**This transaction will increase current assets or debtors due to dishonor of the bill and current liabilities or creditors. This can be tested by increasing both current assets and current liabilities by equal amount say Rs. 50,000.

**Reason:-**This transaction will increase current assets or debtors due to dishonor of the bill and current liabilities or creditors. This can be tested by increasing both current assets and current liabilities by equal amounts say Rs. 50,000.

**Question 15. From the following information, calculate Liquid Ratio:**

**Answer:**

**Point of Knowledge:-**

**Question 16. Quick Assets Rs. 1,50,000; Inventory (Stock) Rs. 40,000; Prepaid Expenses Rs. 10,000; Working Capital Rs. 1,20,000. Calculate Current Ratio.**

**Answer:**

**Question 17. Current Assets Rs. 3,00,000; Inventories Rs. 60,000; Working Capital Rs. 2,52,000. Calculate Quick Ratio.**

**Answer:**

**Question 18. Working Capital Rs. 3,60,000; Total :Debts Rs. 7,80,000; Long-term Debts Rs. 6,00,000; Inventories Rs. 1,80,000. Calculate Liquid Ratio.**

**Answer:**

**Question 19. Current Liabilities of a company are Rs. 6,00,000. Its Current Ratio is 3 : 1 and Liquid Ratio is 1 : 1. Calculate value of Inventory.**

**Answer:**

**Question 20. X Ltd. has a Current Ratio of 3.5:1 and Quick Ratio of 2:1. If the Inventories is Rs. 24,000; calculate total Current Liabilities and Current Assets.**

**Answer:**

**Question 21. X Ltd. has Current Ratio of 4.5:1 and a Question uick Ratio of 3:1. If its inventory is Rs. 36,000, find out its total Current Assets and total Current Liabilities.**

**Answer:**

**Question 22. Current Ratio 4; Liquid Ratio 2.5; Inventory Rs. 6,00,000. Calculate Current Liabilities, Current Assets and Liquid Assets.**

**Answer:**

**Question 23. Current Liabilities of a company are Rs. 1,50,000. Its Current Ratio is 3:1 and Acid Test Ratio (Liquid Ratio) is 1 : 1. Calculate values of Current Assets, Liquid Assets and Inventory.**

**Answer:**

**Question 24. Xolo Ltd.'s Liquidity Ratio is 2.5 : 1. Inventory is Rs. 6,00,000. Current Ratio is 4 : 1. Find out the Current Liabilities.**

**Answer:**

**Question 25. Current Assets of a company is are Rs. 5,00,000. Its Current Ratio is 2.5 : 1 and Quick Ratio is 1:1. Calculate value of Current Liabilities, Liquid Assets and Inventory.**

**Answer:**

**Question 26. Quick Ratio of a company is 2:1. State giving reasons, which of the following transactions would (i) improve, (ii) reduce, (iii) Not change the Quick Ratio:**

**(a) Purchase of goods for cash;**

**(b) Purchase of goods on credit;**

**(c) Sale of goods (costing Rs.10,000) for Rs.10,000;**

**(d) Sale of goods (costing Rs.10,000) for Rs.11,000;**

**(e) Cash received from Trade Receivables.**

**Answer:**

**Question 27. The Quick Ratio of a company is 0.8:1. State with reason, whether the following transactions will increase, decrease or not change the Quick Ratio:**

**(i) Purchase of loose tools for Rs.2,000; (ii) Insurance premium paid in advance Rs.500; (iii) Sale of goods on credit Rs.3,000; (iv) Honoured a bills payable of Rs.5,000 on maturity.**

**Answer:**

**Question 28. XYZ Limited's Inventory is Rs. 3,00,000. Total Liquid Assets are Rs. 12,00,000 and Quick Ratio is 2:1. Work out Current Ratio.**

**Answer:**

**Question 29. Total Assets Rs. 22,00,000; Fixed Assets Rs. 10,00,000; Capital Employed Rs. 20,00,000. There were no Long-term Investments. Calculate Current Ratio.**

**Answer:**

**Question 30. Total Assets Rs. 22,00,000; Fixed Assets Rs. 10,00,000; Capital Employed Rs. 20,00,000. There were no Long-term Investments. Calculate Current Ratio.**

**Answer:**

**Working Notes:-**

**Question 31. Following is the Balance Sheet of Crescent Chemical Works Limited as at 31st March, 2019:**

**Answer:**

**Question 32. From the following Calculate: (i) Current Ratio; and (ii) Quick Ratio:**

**Answer:**

**Question 33. Calculate Debt to Equity Ratio: Equity Share Capital Rs. 5,00,000; General Reserve Rs. 90,000; Accumulated Profits Rs. 50,000; 10% Debentures Rs. 1,30,000; Current Liabilities Rs. 1,00,000.**

**Answer:**

**Question 34. Total Assets Rs. 2,60,000; Total Debts Rs. 1,80,000; Current Liabilities Rs. 20,000. Calculate Debt to Equity Ratio.**

**Answer:**

**Question 35. From the following information, calculate Debt to Equity Ratio:**

**Answer:**

**Question 36. When Debt to Equity Ratio is 2, state giving reason, whether this ratio will increase or decrease or will have no change in each of the following cases:**

**(i) Sale of Land (Book value Rs. 4,00,000) for Rs. 5,00,000; (ii) Issue of Equity Shares for the purchase of Plant and Machinery worth Rs. 10,00,000; (iii) Issue of Preference Shares for redemption of 13% Debentures, worth Rs. 10,00,000.**

**Answer:**

**Question 37. Total Assets Rs. 12,50,000; Total Debts Rs. 10,00,000; Current Liabilities Rs. 5,00,000. Calculate Debt to Equity Ratio.**

**Answer:**

**Question 38. Capital Employed Rs. 8,00,000; Shareholders' Funds Rs. 2,00,000. Calculate Debt to Equity Ratio.**

**Answer:**

**Question 39. Balance Sheet had the following amounts as at 31st March, 2019:**

**Calculate ratios indicating the long-term and the Short-term financial position of the company.**

**Answer:**

**Question 40. Calculate Debt to Equity Ratio from the following information:**

**Answer:**

**Question 41. Debt to Equity Ratio of a company is 0.5:1. Which of the following suggestions would increase, decrease or not change it?**

**(i) Issue of Equity Shares: (ii) Cash received from debtors:**

**(iii) Redemption of debentures; (iv) Purchased goods on Credit?**

**Answer:**

**Question 42. Assuming That the Debt to Equity Ratio is 2:1, state giving reasons, which of the following transactions would (i) increase; (ii) Decrease; (iii) Not alter Debt to Equity Ratio:**

**(i) Issue of new shares for cash.**

**(ii) Conversion of debentures into equity shares**

**(iii) Sale of a fixed asset at profit.**

**(iv) Purchase of a fixed asset on long-term deferred payment basis.**

**(v) Payment to creditors.**

**Answer:**

**(i) Issue of new shares for cash -** will decrease the ratio.

Reason - If shares are issued then the denominator of the ratio will increase which will decrease the ratio.

**(ii) Conversion of debentures into equity shares -** will decrease the ratio.

Reason - If debentures into equity shares then the denominator of the ratio will increase and numerator will decrease which will decrease the ratio.

**(iii) Sale of fixed assets at profit -** will decrease the ratio.

Reason - If fixed assets are sold at a profit then the denominator of the ratio will increase which will decrease the ratio.

**(iv) Purchase of a fixed asset on long-term deferred payment basis -** will increase the ratio.

Reason - If fixed asset is purchased on long-term deferred payment basis then the numerator of the ratio will increase which will increase the ratio.

**(v) Payment to creditors - **will not alter the ratio.

Reason - If payment to creditors is made then it will not affect the debt or equity, hence it will not change the ratio.

** **

**Question 43. From the following Balance Sheet of ABC Ltd. as at 31st March, 2019, Calculate Debt to Equity Ratio:**

**Answer:**

**Question 44. Calculate Total Assets to Debt Ratio from the following information: Long-term Debts Rs. 4,00,000; Total Assets Rs. 7,70,000.**

**Answer:**

**Question 45. Shareholders' Funds Rs. 1,60,000; Total Debts Rs. 3,60,000; Current Liabilities Rs. 40,000. Calculate Total Assets to Debt Ratio.**

**Answer:**

**Question 46. On the basis of the following information, calculate Total Assets to Debt Ratio:**

**Answer:**

**Question 47. Total Debt Rs. 60,00,000; Shareholders’ Fund Rs. 10,00,000; Reserves and Surplus Rs. 2,50,000; Current Assets Rs. 25,00,000; Working Capital Rs. 5,00,000. Calculate Total Assets to Debt Ratio.**

**Answer:**

**Question 48. Total Debt Rs. 15,00,000; Current Liabilities Rs. 5,00,000; Capital Employed Rs. 15,00,000. Calculate Total Assets to Debt Ratio.**

**Answer:**

**Question 49. Calculate Total Assets to Debt Ratio from the following information:**

**Answer:**

**Question 50. Total Debt Rs. 12,00,000; Shareholders’ Funds Rs. 2,00,000; Reserve and Surplus Rs. 50,000; Current Assets Rs. 5,00,000; Working Capital Rs. 1,00,000. Calculate Total Assets to Debt Ratio.**

**Answer:**

**Question 51. Total Debt Rs. 12,00,000; Current Liabilities Rs. 4,00,000; Capital Employed Rs. 12,00,000. Calculate Total Assets to Debt Ratio.**

**Answer:**

**Question 52. From the following information, calculate Total Assets to Debt Ratio:**

**Answer:**

**Question 53. From the following information, calculate Proprietary Ratio:**

**Answer:**

**Question 54. From the following information, calculate Proprietary Ratio:**

**Answer:**

Proprietary Ratio = (Shareholders' Funds)/(Total Assets)

Proprietary Ratio = (Equity Share Capital +Preference Share Capital+ Reserves and Surplus)/(Total Assets)

Proprietary Ratio = (3,00,000+1,50,000+75,000)/(7,50,000) = (5,25,000)/(7,50,000) = 0.70:1

**Question 55. Calculate Proprietary Ratio from the following:**

**Answer:**

**Question 56. From the following information, calculate Proprietary Ratio:**

**Answer:**

**Question 57. State with reason, whether the Proprietary Ratio will improve, decline or will not change because of the following transactions if Proprietary Ratio is 0.8 : 1:**

**(i) Obtained a loan of Rs. 5,00,000 from State Bank of India payable after five years.**

**(ii) Purchased machinery of Rs. 2,00,000 by cheque.**

**(iii) Redeemed 7% Redeemable Preference Shares Rs. 3,00,000.**

**(iv) Issued equity shares to the vendor of building purchased for Rs. 7,00,000.**

**(v) Redeemed 10% redeemable debentures of Rs. 6,00,000.**

**Answer:**

**Question 58. If Profit before Interest and Tax is Rs. 5,00,000 and interest on Long-term Funds is Rs. 1,00,000, find Interest Coverage Ratio.**

**Answer:**

**Question 59. From the following information, calculate Interest Coverage Ratio: Profit after Tax Rs. 1,70,000; Tax Rs. 30,000; Interest on Long-term Funds Rs. 50,000.**

**Answer:**

**Question 60. From the following information, calculate Interest Coverage Ratio:**

**Answer:**

**Question 61. From the following details, calculate Inventory Turnover Ratio:**

**Rs.**

**Cost of Revenue from Operations (Cost of Goods Sold) 4,50,000**

**Inventory in the beginning of the year 1,25,000**

**Inventory at the close of the year 1,75,000**

**Answer:**

**Question 62. Cost of Revenue from Operations (Cost of Goods Sold) Rs. 5,00,000; Purchases Rs. 5,50,000; Opening Inventory Rs. 1,00,000. Calculate Inventory Turnover Ratio.**

**Answer:**

**Working Note:-**

**Question 63. Calculate Inventory Turnover Ratio from the following information:**

**Opening Inventory is Rs. 50,000; Purchases Rs. 3,90,000; Revenue from Operations, i.e., Net Sales Rs. 6,00,000; Gross Profit Ratio 30%.**

**Answer:**

**Working Note:-**

**Question 64. Calculate Inventory Turnover Ratio from the following:**

**Rs.**

**Opening Inventory 29,000**

**Closing Inventory 31,000**

**Revenue from Operations i.e. Sales 3,20,000**

**Gross Profit Ratio 25%**

**Answer:**

**Working Note:-**

**Question 65. From the following information, calculate Inventory Turnover Ratio:**

**Rs.**

**Revenue from Operations 16,00,000**

**Average Inventory 2,20,000**

**Gross Loss Ratio 5%**

**Answer:**

**Question 66. Revenue from Operations Rs. 4,00,000; Gross Profit Rs. 1,00,000; Closing Inventory Rs. 1,20,000; Excess of Closing Inventory over Opening Inventory Rs. 40,000. Calculate Inventory Turnover Ratio.**

**Answer:**

**Question 67. From the following data, calculate Inventory Turnover Ratio:**

**Total Sales Rs. 5,00,000; Sales Return Rs. 50,000; Gross Profit Rs. 90,000; Closing Inventory Rs. 1,00,000; Excess of Closing Inventory over Opening Inventory Rs. 20,000.**

**Answer:**

**Question 68. Rs. 2,00,000 is the Cost of Revenue from Operations (Cost of Goods Sold), during the year. If Inventory Turnover Ratio is 8 times, calculate inventories at the end of the year. Inventories at the end are 1.5 times that of in the beginning.**

**Answer:**

**Question 69. Calculate Inventory Turnover Ratio from the following information:**

**Opening Inventory Rs. 40,000; Purchases Rs. 3,20,000; and Closing Inventory Rs. 1,20,000. State, giving reason, which of the following transactions would (i) increase, (ii) decrease, (iii) neither increase nor decrease the Inventory Turnover Ratio:**

**(a) Sale of goods for Rs. 40,000 (Cost Rs. 32,000).**

**(b) Increase in the value of Closing Inventory by Rs. 40,000.**

**(c) Goods purchased for Rs. 80,000.**

**(d) Purchases Return Rs. 20,000.**

**(e) Goods costing Rs. 10,000 withdrawn for personal use.**

**(f) Goods costing Rs. 20,000 distributed as free samples.**

**Answer:**

**Question 70. Calculate Inventory Turnover Ratio from the data given Below:**

**Rs. Rs.**

**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. Sales 1,00,000**

**Purchases 50,000**

**Answer:**

**Question 71. From the following information, calculate value of Opening Inventory:**

**Closing Inventory = Rs. 68,000**

**Total Sales = Rs. 4,80,000 (including Cash Sales Rs. 1,20,000)**

**Total Purchases = Rs. 3,60,000 (including Credit Purchases Rs. 2,39,200)**

**Goods are sold at a profit of 25% on cost.**

**Answer:**

**Question 72. From the following information, determine Opening and Closing inventories:**

**Inventory Turnover Ratio 5 Times, Total sales Rs. 2,00,000, Gross Profit Ratio 25%. Closing Inventory is more by Rs. 4,000 than the Opening Inventory.**

**Answer:**

**Question 73. Following figures have been extracted from Shivalika Mills Ltd.:**

**Inventory in the beginning of the year Rs. 60,000.**

**Inventory at the end of the year Rs. 1,00,000.**

**Inventory Turnover Ratio 8 times.**

**Selling price 25% above cost.**

**Compute amount of Gross Profit and Revenue from Operations (Net Sales).**

**Answer:**

**Working Note:-**

**Question 74. Inventory Turnover Ratio 5 times; Cost of Revenue from Operations (Cost of Goods Sold) Rs. 18,90,000. Calculate Opening Inventory and Closing Inventory if Inventory at the end is 2.5 times more than that in the beginning.**

**Answer:**

**Question 75. Rs. 3,00,000 is the Cost of Revenue from Operations (Cost of Goods Sold).
Inventory Turnover Ratio 8 times; Inventory in the beginning is 2 times more than the inventory at the end. Calculate value of Opening and Closing Inventories.
Answer:**

Let Closing Inventory be X

Therefore Opening Inventory be 3X, as it is 2 times more

Inventory Turnover Ratio = (Cost of Revenue from Operations)/(Average Inventory)

8 = (Rs.3,00,000)/((Opening Inventory+Closing Inventory) ÷ 2)

8 = Rs. ( 3,00,000)/((3X+X) ÷ 2)

8/1 = Rs. ( 3,00,000 × 2)/4X

8 × 4X = Rs. 6,00,000

X = 6,00,000/32

X = 18,750

Therefore Opening Inventory = 3 × X = 3 × 18,750 = Rs. 56,250

**Q76. From the following Information, calculate Inventory Turnover Ratio:**

**Credit Revenue from Operations Rs. 3,00,000; Cash Revenue from Operations Rs. 1,00,000, Gross Profit 25% of Cost, Closing Inventory was 3 times the Opening Inventory. Opening Inventory was 10% of Cost of Revenue from Operations.**

**Answer:**

**Working Capital:-**

Total Revenue from Operations = Cash Revenue from Operations + Credit Revenue from Operations

Total Revenue from Operations = Rs. 3,00,000 + Rs. 1,00,000

Total Revenue from Operations = Rs. 4,00,000

Let Cost of Revenue from Operations be X.

Revenue from Operations = Cost of Revenue from Operations + Gross Profit

Revenue from Operations = Cost of Revenue from Operations + Cost of Revenue from Operations × 25%

**Q77. Calculate Inventory Turnover Ratio in each of the following alternative cases:
Case 1: Cash Sales 25% of Credit Sales; Credit Sales Rs. 3,00,000; Gross Profit 20% on Revenue from Operations, i.e., Net Sales; Closing Inventory Rs. 1,60,000; Opening Inventory Rs. 40,000.
Case 2: Cash Sales 20% of Total Sales; Credit Sales Rs. 4,50,000; Gross Profit 25% on Cost; Opening Inventory Rs. 37,500; Closing Inventory Rs. 1,12,500.**

**Answer:**

Credit Sales = Rs. 3,00,000

**Case 1:**

Cash Sales = Credit Sales × 25/100

= Rs. 3,00,000 × 25/100

= Rs. 75,000

Total Sales = Cash Sales + Credit Sales

= Rs. 75,000 + Rs. 3,00,000

= Rs. 3,75,000

Total Sales = Cost of goods sold + Gross Profit

Total sales = Cost of goods sold + Total Sales × 20/100

Rs. 3,75,000 = Cost of goods sold + 3,75,000 × 20/100

Cost of goods sold = Rs. 3,75,000 – Rs. 75,000

Cost of goods sold = Rs. 3,00,000

**Q78. From the following Statement of Profit and Loss for the year ended 31st March, 2019 of Rex Ltd., calculate Inventory Turnover Ratio:**

**Answer:**

**Q79. Credit Revenue from Operations, i.e., Net Credit Sales for the year Rs. 1,20,000, Debtors Rs.12,000, Bill’s Receivable Rs. 8,000. Calculate Trade Receivables Turnover Ratio.
Answer:**

**Q80. Calculate Trade Receivables Turnover Ratio from the following information:**

**Answer:**

**Q81. Closing Trade Receivables Rs. 1,00,000; Cash Sales being 25% of Credit Sales; Excess of Closing Trade Receivables over Opening Trade Receivables Rs. 40,000; Revenue from Operations, i.e., Net Sales Rs. 6,00,000. Calculate Trade Receivables Turnover Ratio.
Answer:**

**Q82. Compute Trade Receivables Turnover Ratio from the following:**

**Answer:**

**Q83. Rs. 1,75,000 is the Credit Revenue from Operations, i.e., Net Credit Sales of an enterprise. If Trade Receivables Turnover Ratio is 8 times, calculate Trade Receivables in the Beginning and at the end of the year. Trade Receivables at the end is Rs. 7,000 more than that in the beginning.
Answer:**

Let Trade Receivables in the beginning be X

Therefore Trade Receivables at the end is X + 7,000

**Q84. From the following particulars, determine Trade Receivables Turnover Ratio:**

**Answer:**

Debtors will not be averages as only figure is given in the question. Single figure of debtors in the information is taken as closing debtors.

**Q85. Closing Trade Receivables Rs. 1,20,000, Revenue from Operations Rs. 14,40,000. Provision for Doubtful Debts Rs. 20,000. Calculate Trade Receivables Turnover Ratio.
Answer:**

Debtors will not be averaged as only one figure is given in the question. Single figure of debtors in the information is taken as closing debtors. Provision for Doubtful Debts will not be deducted from debtors.

**Q86. Closing Trade Receivables Rs. 4,00,000; Cash Sales being 25% of Credit Sales; Excess of Closing Trade Receivables over Opening Trade Receivables Rs. 2,00,000; Revenue from Operations, i.e., Revenue from Operations, i.e., Net Sales Rs. 15,00,000. Calculate Trade Receivables Turnover Ratio.
Answer:**

**Q87. A firm normally has trade Receivables equal to two months' credit Sales. During the coming year it expects Credit Sales of Rs. 7,20,000 spread evenly over the year (12 months). What is the estimated amount of Trade Receivables at the end of the year?
Answer:**

**Q88. A limited company made Credit Sales of Rs. 4,00,000 during the financial period. If the collection period is 36 days and year is assumed to be 360 days, calculate:
(i) Trade Receivables Turnover Ratio;
(ii) Average Trade Receivables;
(iii) Trade Receivables at the end when Trade Receivables at the end are more than that in the beginning by Rs. 6,000.
Answer:**

Let opening Trade Receivables be X and Closing be X + Rs. 6,000

Rs. 40,000 × 2 = 2X + Rs. 6,000

Rs. 80,000 – Rs. 6,000 = 2X

Rs. 74,000 = 2X

X = 74,000/2

X = 37,000

Opening Trade Receivables = Rs. 37,000

Closing Trade Receivables = X + Rs. 6,000 = Rs. 37,000 + Rs. 6,000 = Rs. 43,000

**Q89. Cash Revenue from Operations (Cash Sales) Rs. 2,00,000, Cost of Revenue from Operations or Cost of Goods Solds Rs. 3,50,000; Gross Profit Rs. 1,50,000; Trade Receivables Turnover Ratio 3 Times. Calculate Opening and Closing Trade Receivables in each of the following alternative cases;**

**Case 1: If Closing Trade Receivables were Rs. 1,00,000 in excess of Opening Trade Receivables.**

**Case 2: If trade Receivables at the end were 3 times than in the beginning.**

**Case 3: If Trade Receivables at the end were 3 times more than that of in the beginning.**

**Answer:**

**Case 1:**

If Closing Trade Receivables were Rs. 1,00,000 in excess of Opening Trade Receivables:

Opening Trade Receivables = Rs. 50,000

Therefore Closing Trade Receivables = X + Rs. 1,00,000

= Rs. 50,000 + Rs. 1,00,000

= Rs. 1,50,000

**Case 2:**

If Trade Receivables at the end are 3 times than in the beginning:

Let Opening Trade Receivables be X and Closing Trade Receivables = 3X

We can start with Average Trade Receivables:

Average Trade Receivables = Opening Trade Receivables+Closig Trade Receivables/2

Rs. 1,00,000 = X+3X/2

Rs. 1,00,000 = 4X/2

Opening Trade Receivables = Rs. 50,000

Therefore Closing Trade Receivables = 3X = 3 × Rs. 50,000 = Rs. 1,50,000

**Case 3:**

If debtors at the end were 3 times more than that in the beginning:

Let opening Trade Receivables be X and Closing Trade Receivables be 4X

We can start with average Trade Receivables:

Average Trade Receivables = (Opening Trade Receivables+Closing Trade Receivbles)/2

Rs. 1,00,000 = (X + 4X)/2

Rs. 1,00,000 × 2 = 5X

Rs. 2,00,000 = 5X

Rs. 2,00,000/5 = X

Opening Trade Receivables = Rs. 40,000

Therefore Closing Trade Receivables = 4X = 4 × Rs. 40,000 = Rs. 1,60,000

**Working Notes:-**

Total Sales = Cost of Goods Sold + Gross Profit

= Rs. 3,50,000 + Rs. 1,50,000

= Rs. 5,00,000

Credit Sales = Total Sales – Cash Sales

= Rs. 5,00,000 – Rs. 2,00,000

= Rs. 3,00,000

**Q90. From the following information, calculate Opening and Closing Trade Receivables, if Trade Receivables Turnover Ratio is 3 Times:**

**(i) Cash Revenue from Operations is 1/3rd of Credit Revenue from Operations.**

**(ii) Cost of Revenue from Operations is Rs. 3,00,000.**

**(iii) Gross Profit is 25% of the Revenue from Operations.**

**(iv) Trade Receivables at the end are 3 Times more than that of in the beginning.**

**Answer:**

Let Revenue from Operations be X.

Total Revenue from Operations = Cost of Revenue from Operations + Gross Profit

Revenue from Operations = Cost of Revenue from Operations + Revenue from Operations × 25%

Z = Rs. 40,000

Opening Trade Receivables = Rs. 40,000

Closing Trade Receivables = 4 Z = 4 × Rs. 40,000 = Rs. 1,60,000

**Q91. Calculate Trade Receivables Turnover Ratio in each of the following alternative cases:**

**Case 1: Net Credit Sales Rs. 4,00,000; Average Trade Receivables Rs. 1,00,000.**

**Case 2: Revenue from Operations (Net Sales) Rs. 30,00,000; Cash Revenue from Operations, i.e., Cash Sales Rs. 6,00,000; Opening Trade Receivables Rs. 2,00,000; Closing Trade Receivables Rs. 6,00,000.**

**Case 3: Cost of Revenue from Operations or Cost of Goods Sold Rs. 3,00,000; Gross Profit on Cost 25%; Cash Sales 20% of Total Sales; Opening Trade Receivables Rs. 50,000; Closing Trade Receivables Rs. 1,00,000.**

**Case 4: Cost of Revenue from Operations or Cost of Goods Sold Rs. 4,50,000; Gross Profit on Sales 20%; Cash Sales 25% of Net Credit Sales, Opening Trade Receivables Rs. 90,000; Closing Trade Receivables Rs. 60,000.**

**Answer:**

**Working Note:-**

Total Revenue from Operations = Cost of goods sold + Gross Profit

Total Revenue from Operations = Cost of Goods sold + Cost of goods sold × 25/100

Total Revenue from Operations = Rs. 3,00,000 + Rs. 3,00,000 × 25/100

Total Revenue from Operations = Rs. 3,00,000 + Rs. 75,000

Total Revenue from Operations = Rs. 3,75,000

Total Revenue from Operations = Cash Revenue from Operations + Credit Revenue from Operations

Total Revenue from Operations = Total Revenue from Operations × 20/100 + Credit Revenue from Operations

Rs. 3,75,000 = Rs. 3,75,000 × 20/100 + Credit Revenue from Operations

Credit Revenue from Operations = Rs. 3,00,000

**Working Note:-**

Total Sales = Cost of goods sold + Gross Profit

Total Sales = Cost of goods sold + Total Sales × 20/100 (Let total Sales be X)

X = Rs. 4,50,000 + X/5

X - X/5 = Rs. 4,50,000

5X-X/5 = Rs. 4,50,000

4X/5 = Rs. 4,50,000

X = Rs. 4,50,000 × 5/4

Total Sales = Rs. 5,62,500

Total Sales = 25/100 × Credit Sales + Credit Sales

Rs. 5,62,500 = Y/4 + Y (Let Y be credit Sales)

Rs. 5,62,500 = Y+4Y/4

Rs. 5,62,500 = 5Y/4

Y = Rs. 5,62,500 × 4/5

Net Credit Sales = Rs. 4,50,000

**Q92. From the information given below, calculate Trade Receivables Turnover Ratio:**

**Credit Revenue from Operations, i.e., Credit Sales Rs. 8,00,000; Opening Trade Receivables Rs. 1,20,000; and Closing Trade Receivables Rs. 2,00,000.**

**State giving reason, which of the following would increase, decrease or not change Trade Receivables Turnover Ratio:**

**(i) Collection from Trade Receivables Rs. 40,000.**

**(ii) Credit Revenue from Operations, i.e., Credit Sales Rs. 80,000.**

**(iii) Sales Return Rs. 20,000.**

**(iv) Credit Purchase Rs. 1,60,000.**

**Answer:**

(iv) Credit purchases of goods will increase cost of goods sold and closing creditors. It has nothing to do with net credit sales or closing debtors or average debtors or average debtors. So this transactions will not change the trade Receivables Turnover Ratio.

**Q93. Calculate Trade Payables Turnover Ratio and Average Debt payment Period from the following information:**

**Total Purchases Rs. 21,00,000; Purchases Return Rs. 1,00,000; Cash Purchases Rs. 4,00,000.**

**Answer:**

**Q94. Calculate Trade payables Turnover Ratio from the following information:
Opening Creditors Rs. 1,25,000; Opening Bills Payable Rs. 10,000; Closing Creditors Rs. 90,000; Closing bills Payable Rs. 5,000; Purchases Rs. 9,50,000; Cash Purchases Rs. 1,00,000; Purchases Return Rs. 45,000.
Answer:**

**Q95. Calculate Trade Payables Turnover Ratio for the year 2018-19 in each of the alternative cases:
Case 1: Closing Trade Payables Rs. 45,000; Net Purchases Rs. 3,60,000; Purchases Return Rs. 60,000; Cash Purchases Rs. 90,000.
Case 2: Opening Trade Payables Rs. 15,000; Closing Trade Payables Rs. 45,000; Net Purchases Rs. 3,60,000.
Case 3: Closing Trade Payables Rs. 45,000; Net Purchases Rs. 3,60,000.
Case 4: Closing Trade Payables (including Rs. 25,000 due to a supplier of machinery) Rs. 55,000; Net Credit Purchases Rs. 3,60,000.
Answer:**

**Answer:**

**Q97. Revenue from Operations: Cash Sales Rs. 5,00,000; Credit Sales Rs. 6,00,000; Sales Return Rs. 1,00,000. Current Assets Rs. 3,00,000; Current Liabilities Rs. 1,00,000. Calculate Working Capital Turnover Ratio.
Answer:**

**Q98. Equity Share Capital Rs. 15,00,000; Gross Profit on Revenue from Operations, i.e., Net Sales 331/3%; Cost Revenue from Operations or Cost of Goods Sold Rs. 20,00,000; Current Assets Rs. 10,00,000; Current Liabilities Rs. 2,50,000. Calculate Working Capital Turnover Ratio.
Answer:**

**Working Note:-**

Revenue from Operations = Cost of Goods Sold or Cost of Revenue from Operations + Gross Profit

X = Cost of goods sold + X/3 (Let Revenue from Operations be X)

X = Rs. 20,00,000 + X/3

X - X/3 = Rs. 20,00,000

3X-X/3 = Rs. 20,00,000

2X/3 = Rs. 20,00,000

X = 20,00,000 × 3/2

Revenue from Operations = Rs. 30,00,000

**Q99. Gross Profit at 25% on cost; Gross profit Rs. 5,00,000; Equity Share Capital Rs. 10,00,000; Reserves and Surplus 2,00,000; Long-term Loan 3,00,000; Fixed Assets (Net) Rs. 10,00,000. Calculate Working Capital Turnover Ratio.**

**Answer:**

**Working Note:-**

Gross Profit = Cost of Revenue from Operations × 25/100

Rs. 5,00,000 = Cost of Revenue from Operations × 1/4

Cost of Revenue from Operations = Rs. 20,00,000

Revenue from Operations = Cost of Revenue from Operations + Gross Profit

= Rs. 20,00,000 + Rs. 5,00,000

= Rs. 25,00,000

Working Capital = Equity Share Capital + Reserves and Surplus + Long term Loan – Fixed Assets

= Rs. 10,00,000 + Rs. 2,00,000 + Rs. 3,00,000 – Rs. 10,00,000

= Rs. 5,00,000

**Q100. Capital Employed Rs. 12,00,000; Net Fixed Assets Rs. 8,00,000; Cost of Goods Sold or Cost of Revenue from Operations Rs. 40,00,000; Gross Profit is 20% on Cost. Calculate Working Capital Turnover Ratio.**

**Answer:**

**Working Notes:-**

Revenue from Operations = Cost of Revenue from Operations + Gross Profit

Sales = Cost of Revenue from Operations + Cost of Revenue from Operations × 20/100

Revenue from Operations = Rs. 40,00,000 + Rs. 40,00,000 × 1/5

Revenue from Operations = Rs. 40,00,000 + Rs. 8,00,000

Revenue from Operations = Rs. 48,00,000

Working Capital = Capital Employed – Net Fixed Assets

= Rs. 12,00,000 – Rs. 8,00,000

= Rs. 4,00,000

**Q101. Calculate Working Capital Turnover Ratio from the following information:**

**Revenue from Operations Rs. 30,00,000; Current Assets Rs. 12,50,000; Total Assets Rs. 20,00,000; Non-current Liabilities Rs. 10,00,000, Shareholders' Funds Rs. 5,00,000.**

**Answer:**

**Working Notes:-**

Current Liabilities = Total Assets – Shareholders’ Fund – non-current Liabilities

= Rs. 20,00,000 – Rs. 5,00,000 – Rs. 10,00,000

= Rs. 5,00,000

Working Capital = Current Assets – Current Liabilities

= Rs. 12,50,000 – Rs. 5,00,000

= Rs. 7,50,000

**Q102. A company earns Gross Profit of 25% on cost. For the year ended 31st March, 2017 its Gross Profit was Rs. 5,00,000; Equity Share Capital of the company was Rs. 10,00,000; Reserves and Surplus Rs. 2,00,000; Long-term Loan Rs. 3,00,000 and Non-current Assets were Rs. 10,00,000. Compute the 'Working Capital Turnover Ratio' of the company.
Answer:**

**Working Note:-**

Revenue from Operations = Cost of revenue from Operations + Gross Profit

= Gross Profit × Reverse of Rate of Return + Gross Profit

= Rs. 5,00,000 × 100/25 × Rs. 5,00,000

= Rs. 20,00,000 + Rs. 5,00,000

= Rs. 25,00,000

Working Capital = Equity Share Capital + Reserves and Surplus + Long term Loan – Non-current Assets

= Rs. 10,00,000 – Rs. 2,00,000 + Rs. 3,00,000 – Rs. 10,00,000

= Rs. 5,00,000

**Q103. Compute Gross Profit Ratio from the following information:
Cost of Revenue from Operations (Cost of Goods Sold) Rs. 5,40,000; Revenue from Operations (Net Sales) Rs. 6,00,000.
Answer:**

**Q104. From the following, calculate Gross Profit Ratio:
Gross Profit: Rs. 50,000; Revenue from Operations Rs. 5,00,000; Sales Return: Rs. 50,000.
Answer:**

**Q105. Compute Gross Profit Ratio from the following information:
Revenue from Operations, i.e., Net Sales = Rs. 4,00,000; Gross Profit 25% on Cost.
Answer:**

**Working Note:-**

Revenue from Operations = Cost of Revenue from Operations + Gross Profit

Cost of Revenue from Operations + Cost of Revenue from Operations × 25/100 = Sales

Rs. 4,00,000 = X + X/4

Rs. 4,00,000 = 4X + X/4

Rs. 4,00,000 = 5X/4

X = Rs. 4,00,000 × 4/5

Cost of Revenue from Operations = Rs. 3,20,000

Gross Profit = Revenue from Operations – Cost of Revenue from Operations

= Rs. 4,00,000 – Rs. 3,20,000

= Rs. 80,000

**Q106. Calculate Gross Profit Ratio from the following data:
Cash Sales are 20% of Total Sales; Credit Sales are Rs. 5,00,000; Purchases are Rs. 4,00,000; Excess of Closing Inventory over Opening Inventory Rs. 25,000.
Answer:**

Sales = Rs. 6,25,000

Closing Inventory = Opening Inventory + Purchases – Closing Inventory

= Rs. 1,00,000 + Rs. 4,00,000 – Rs. 1,25,000

= Rs. 3,75,000

Gross Profit = Sales – Cost of Goods Sold

= Rs. 6,25,000 – Rs. 3,75,000

= Rs. 2,50,000

**Q107. From the following information, calculate Gross Profit Ratio:**

**Answer:**

**Working Note:-**

Cash Sales = Credit Sales × 1/4

= Rs. 5,00,000 × 1/4

= Rs. 1,25,000

Total Sales = Cash Sales + Credit Sales

= Rs. 1,25,000 + Rs. 5,00,000

= Rs. 6,25,000

Cost of Revenue from Operations = Purchases + Decrease in Inventory – Returns Outward + Carriage Inwards + Wages

= Rs. 3,00,000 + Rs. 10,000 – Rs. 10,000 + Rs. 50,000

= Rs. 3,60,000

Gross Profit = Total Sales – Cost of Revenue from Operations

= Rs. 6,25,000 – Rs. 3,60,000

= Rs. 2,65,000

**Q108. Calculate Gross Profit Ratio from the following data:
Average Inventory Rs. 3,20,000; Inventory Turnover Ratio 8 Times; Average Trade Receivables Rs. 4,00,000; Trade Receivables Turnover Ratio 6 Times; Cash Sales 25% of Net Sales.
Answer:**

Rs. 24,00,000 = Credit Revenue from Operations

Net Revenue from Operations = Credit Revenue from Operations + Cash Revenue from Operations

X = Rs. 24,00,000 + X/4 (Let Net Revenue from Operations be X)

X - X/4 = Rs. 24,00,000

4X-X/4 = Rs. 24,00,000

3X/4 = Rs. 24,00,000

Net Revenue from Operations = Rs. 24,00,000 × 4/3

Net Revenue from Operations = Rs. 32,00,000

Gross Profit = Revenue from Operations – Cost of Revenue from Operations

= Rs. 32,00,000 – Rs. 25,60,000

= Rs. 6,40,000

**Q109. (i) Revenue from Operations: Cash Sales Rs. 4,20,000; Credit Sales Rs. 6,00,000; Return Rs. 20,000. Cost of Revenue from Operations or Cost of Goods Sold Rs. 8,00,000. Calculate Gross Profit Ratio.
(ii) Average Inventory Rs. 1,60,000; Inventory Turnover Ratio is 6 Times; Selling Price 25% above cost. Calculate Gross Profit Ratio.
(iii) Opening Inventory Rs. 1,00,000; Closing Inventory Rs. 60,000; Inventory Turnover Ratio 8 Times; Selling Price 25% above cost. Calculate Gross Profit Ratio.
Answer:**

6 Times × Rs. 1,60,000 = Cost of Revenue from Operations

Cost of Revenue from Operations = Rs. 9,60,000

Sales = Cost of goods sold + Gross Profit

= Cost of Goods sold + Cost of goods sold × 25/100

= Rs. 9,60,00 + Rs. 9,60,000 × 25/100

= Rs. 9,60,000 + Rs. 2,40,000

= Rs. 1,20,000

Sales = Cost of goods sold + Gross Profit

Rs. 12,00,000 = Rs. 9,60,000 + Gross Profit

Gross Profit = Rs. 2,40,000

8 Times × Rs. 80,000 = Cost of Revenue from Operations

Cost of Revenue from Operations = Rs. 6,40,000

Gross Profit = Cost of Goods Sold × 25/100

= Rs. 6,40,000 × 25/100

= 1,60,000

Sales = Cost of goods sold + Gross Profit

Sales = Rs. 6,40,000 + Rs. 1,60,000

Sales = Rs. 8,00,000

**Q110. Gross Profit Ratio of a company is 25%. State giving reason, which of the following transactions will (a) increase or (b) decrease or (c) not alter the Gross Profit Ratio.**

**(i) Purchases of Stock-in-Trade Rs. 50,000.**

**(ii) Purchases Return Rs. 15,000.**

**(iii) Cash Sale of Stock-in-Trade Rs. 40,000.**

**(iv) Stock-in-Trade costing Rs. 20,000 withdrawn for personal use.**

**(v) Stock-in-Trade costing Rs. 15,000 distributed as free sample.
Answer:**

(i) Purchases of Stock-in-Trade Rs. 50,000- will not alter the Gross Profit Ratio.

Reason- Purchases of Stock-in-Trade will increase purchase and closing inventory but there will be no change in gross profit and gross profit ratio.

(ii) Purchases Return Rs. 15,000- will not alter the Gross Profit Ratio.

Reason- Purchases return will increase purchases return and reduce closing inventory but there will be no change in profit and gross profit ratio.

(iii) Cash Sales of Stock-in-trade Rs. 40,000- will not alter the gross profit Ratio.

Reason- Cash sale of Stock-in-Trade will increase sales and reduce closing inventory but there will be no change in gross profit and gross profit ratio as the inventory is sold at cost price.

(iv) Stock-in-Trade costing Rs. 20,000 withdrawn for personal use – will not alter the gross profit Ratio.

Reason- Stock-in-Trade costing Rs. 20,000 withdrawn for personal use will increase drawings and reduce closing inventory but there will be no change in gross profit and gross profit ratio.

(v) Stock-in-Trade costing Rs. 15,000 distributed as free samples – will not alter the gross profit Ratio.

Reason – Stock-in-Trade costing Rs. 15,000 distributed as free samples will increase advertisement expenses and reduce closing inventory but there will be no change in gross profit and gross profit ratio.

**Q111. Cost of Revenue from Operations (Cost of Goods Sold) Rs. 3,00,000. Operating Expenses Rs. 1,20,000. Revenue from Operations: Cash Sales Rs. 5,20,000; Return Rs. 20,000. Calculate Operating Ratio.**

**Answer:**

**Q112. Operating Ratio 92%; Operating Expenses Rs. 94,000; Revenue from Operations Rs. 6,00,000; Sales Return Rs. 40,000. Calculate Cost of Revenue from Operations (Cost of Goods Sold).
Answer:**

**Q113. (i) Cost of Revenue from Operations (Cost of Goods Sold) Rs. 2,20,000; Revenue from Operations (Net Sales) Rs. 3,20,000; Selling Expenses Rs. 12,000; Office Expenses Rs. 8,000; Depreciation Rs. 6,000. Calculate Operating Ratio.
(ii) Revenue from Operations, Cash Sales Rs. 4,00,000; Credit Sales Rs. 1,00,000; Gross Profit Rs. 1,00,000; Office and Selling Expenses Rs. 50,000. Calculate Operating Ratio.
Answer:**

**Q114. From the following information, calculate Operating Ratio:**

**Answer:**

]

**Q115. Calculate Cost of Revenue from Operations from the following information:
Revenue from Operations Rs. 12,00,000; Operating Ratio 75%; Operating Expenses Rs. 1,00,000.
Answer:**

**Q116. Calculate Operating Ratio from the following information:
Operating Cost Rs. 6,80,000; Gross Profit 25%; Operating Expenses Rs. 80,000.
Answer:**

**Q117. Calculate Operating Profit Ratio from the following information:**

**Answer:**

**Working Note:-**

Cost of Revenue from Operations = Opening Inventory + Purchases – Closing Inventory

= Rs. 1,00,000 + Rs. 10,00,000 – Rs. 15,000

= Rs. 9,50,000

Operating Net Profit = Revenue from Operations – Cost of Revenue from Operations – Administrative and Selling Expenses

= Rs. 14,70,000 – Rs. 9,50,000 – Rs. 1,70,000

= Rs. 3,50,000

**Q118. Calculate Operating Profit Ratio from the Following:**

**Answer:**

**Working Note:-**

Operating Net Profit = Revenue from Operations (Net Sales) – Cost of Revenue from Operations – Office and Administration Expenses

= Rs. 5,00,000 – Rs. 2,00,000 – Rs. 50,000

= Rs. 2,50,000

**Q119. What will be the Operating Profit Ratio, if Operating Ratio is 82.59%?
Answer:**

Operating Profit = Total Sales – (Cost of Goods Sold + Operating Expenses)

If Sales will be 100% and Operating Ratio is 82.59% then:

Operating Profit Ratio = Sales Ratio – Operating Ratio

= 100% - 82.59% = 17.41%

**Q120. Calculate Operating Profit Ratio, in each of the following alternative cases:
Case 1: Revenue from Operations (Net Sales) Rs. 10,00,000; Operating Profit Rs. 1,50,000.
Case 2: Revenue from Operations (Net Sales) Rs. 6,00,000; Operating Cost Rs. 5,10,000.
Case 3: Revenue from Operations (Net Sales) Rs. 3,60,000; Gross Profit 20% on Sales; Operating Expenses Rs. 18,000
Case 4: Revenue from Operations (Net Sales) Rs. 4,50,000; Cost of Revenue from Operations Rs. 3,60,000; Operating Expenses Rs. 22,500.
Case 5: Cost of Goods Sold, i.e., Cost of Revenue from Operations Rs. 8,00,000; Gross Profit 20% on Sales; Operating Expenses Rs. 50,000.
Answer:**

**Working Notes:-**

Net Sales = Cost of goods sold + Gross profit

Net Sales = Cost of goods sold + Net sales × 20/100

Rs. 3,60,000 = Cost of goods sold + Rs. 3,60,000 × 20/100

Rs. 3,60,000 = Cost of goods sold + Rs. 72,000

Cost of goods sold = Rs. 3,60,000 – Rs. 72,000

Cost of goods sold = Rs. 2,88,000

Operating Profit = Net Sales – Cost of goods sold – Operating Expenses

= Rs. 3,60,000 – Rs. 2,88,000 – Rs. 18,000

= Rs. 54,000

**Working Note:-**

Total Sales = Cost of goods sold + Gross Profit

Total Sales = Cost of goods sold + Total Sales × 20/100

X = Rs. 8,00,000 + X/5

X - (X/5) = Rs. 8,00,000

5X-X/5 = Rs. 8,00,000

X = Rs. 8,00,000 × 5/4

X = Rs. 10,00,000

Total Sales = Rs. 10,00,000

Net Sales = Rs. 10,00,000

**Q121. Revenue from Operations Rs. 9,00,000; Gross Profit 25% on Cost; Operating Expenses Rs. 45,000. Calculate Operating Profit Ratio.
Answer:**

**Working Note:-**

Gross Profit = Rs. 9,00,000 × 25/100 = Rs. 1,80,000

Operating Profit = Gross Profit – Operating Expenses

= Rs. 1,80,000 – Rs. 45,000

= Rs. 1,35,000

**Q122. Operating Cost Rs. 3,40,000; Gross Profit Ratio 20%; Operating Expenses Rs. 20,000. Calculate Operating Profit Ratio.
Answer:**

**Working Note:-**

Cost of Revenue from Operations = Operating Cost – Operating Expenses

= Rs. 3,40,000 – Rs. 20,000

= Rs. 3,20,000

Gross Profit = (3,20,000 × 20)/80 = Rs. 80,000

Revenue from Operations = Cost of Revenue from Operations + Gross Profit

= Rs. 3,20,000 + Rs. 80,000

= Rs. 4,00,000

Operating Profit = Revenue from Operations – Operating Cost

= Rs. 4,00,000 – Rs. 3,00,000

= Rs. 60,000

**Q123. Cash Sales Rs. 2,20,000; Credit Sales Rs. 3,00,000; Sales Return Rs. 20,000; Gross Profit Rs. 1,00,000; Operating Expenses Rs. 25,000; Non-operating incomes Rs. 30,000; Non-operating Expenses Rs. 5,000. Calculate Net Profit Ratio.
Answer:**

**Working Notes:-**

Net Sales = Cash Sales + Credit Sales – Sales Return

= Rs. 2,20,000 + Rs.3,00,000 – Rs. 20,000

= Rs. 5,00,000

Net Profit = Gross Profit – Operating Expenses + Non-Operating Income – Non-Operating Expenses

= Rs. 1,00,000 – Rs. 25,000 + Rs. 30,000 – Rs. 5,000

= Rs. 1,00,000

**Q124. Revenue from Operations, i.e., Net Sales Rs. 6,00,000 and Net Profit Rs.60,000. Calculate Net Profit Ratio.**

**Answer:**

**Q125. Revenue from Operations, i.e., Net Sales Rs. 8,20,000; Return Rs. 10,000; Cost of Revenue from Operations (Cost of Goods Sold) Rs. 5,20,000; Operating Expenses Rs. 2,09,000; Interest on Debentures Rs. 40,500; Gain (Profit) on Sale of a Fixed Asset Rs. 81,000. Calculate Net Profit Ratio**

**Answer:**

**Working Note:-**

Revenue from Operations = Rs. 8,20,000

Net Profit = Revenue from Operations – Cost of Revenue from Operations – Operating Expenses – Interest on Debentures + Profit on Sale of a Fixed Asset

= Rs. 8,20,000 – Rs. 5,20,000 – Rs. 2,09,000 – Rs. 40,500 + Rs. 81,000

= Rs. 1,31,500

**Q126. Revenue from Operations Rs. 4,00,000; Gross Profit Ratio 25%; Operating Ratio 90%. Non-operating Expenses Rs. 2,000; Non-operating Income Rs. 22,000. Calculate Net Profit Ratio.**

**Answer:**

**Working Note:-**

Cost of Revenue from Operations + Operating Expenses

= Revenue from Operations × 90%

= Rs. 4,00,000 × 90% = Rs. 3,60,000

Net Profit = Revenue from Operations – Cost of Revenue from Operations – Operating Expenses – Non-operating Expenses + Non-operating income

= Rs. 4,00,000 – Rs. 3,60,000 – Rs. 2,000 + Rs. 22,000 = Rs. 60,000

**Q127. Calculate Return on Investment (ROI) from the following details: Net Profit after Tax Rs. 6,50,000; Rate of Income Tax 50%; 10% Debentures of Rs. 100 each Rs. 10,00,000; Fixed Assets at cost Rs. 22,50,000; Accumulated Depreciation on Fixed Assets up to date Rs. 2,50,000; Current Assets Rs. 12,00,000; Current Liabilities Rs. 4,00,000.**

**Answer:**

**Working Note:-**

Net Profit before Interest, Tax and Dividend

= Net Profit after Tax + 10% Debentures Interest + Income Tax + Preference Dividend

= Rs. 6,50,000 + Rs. 10,00,000 × 10/100 + Rs. 6,50,000 × 100/50 × 50/100 + 0

= Rs. 6,50,000 + Rs. 1,00,000 + Rs. 6,50,000 + 0

= Rs. 14,00,000

Capital Employed = Fixed Assets – Accumulated Depreciation on Fixed Assets up to date + Current Assets – Current liabilities

Rs. 22,50,000 – RS. 2,50,000 + Rs. 12,00,000 – Rs. 4,00,000 = Rs. 28,00,000

**Q128. Net Profit before Interest and Tax Rs. 2,50,000; Capital Employed Rs. 10,00,000. Calculate Return on Investment.**

**Answer:**

**Q130. Net Profit before Interest and Tax Rs. 4,00,000; 15% Long-term Debt Rs. 8,00,000; Shareholders' Funds Rs. 4,00,000. Calculate Return on Investment.
Answer:**

**Q131. Y Ltd.'s profit after interest and tax was Rs. 1,00,000. Its Current Assets were Rs. 4,00,000; Current Liabilities Rs. 2,00,000; Fixed Assets Rs. 6,00,000 and 10% Long-term Debt Rs. 4,00,000. The rate of tax was 20%. Calculate 'Return on Investment' of Y Ltd.**

**Answer:**

Profit after interest and Tax = Rs. (1,25,000 + 40,000) = Rs. 1,65,000

Capital Employed = Fixed Assets + Current Assets – Current Liabilities

= (Rs. 6,00,000 + Rs. 4,00,000) – 2,00,000

= Rs. 8,00,000

**Q132. From the following Balance Sheet of Global Ltd., you are required to calculate Return on Investment for the year 2018-19:**

**Additional Information: Net Profit before Tax for the year 2018-19 is Rs. 9,72,000.**

**Answer:**

**Q133. Following is the Balance Sheet of the Bharati Ltd. as at 31st March, 2019:**

**You are required to Calculate Return on Investment for the year 2018-19 with reference to Opening Capital Employed.**

**Answer:**

**Q134. State with reason whether the following transactions will increase, decrease or not change the 'Return on Investment' Ratio:
(i) Purchase of machinery worth Rs.10,00,000 by issue of equity shares.
(ii) Charging depreciation of Rs. 25,000 on machinery.
(iii) Redemption of debentures by cheque Rs. 2,00,000.
(iv) Conversion of 9% Debentures of Rs. 1,00,000 into equity shares. **

**Answer:**

(i) Purchase of machinery worth Rs. 10,00,000 by issue of equity shares. This transaction will affect the value of the denominator of the ratio as we are issuing equity shares. There will be no effect on the numerator of the fraction in ratio. Therefore denominator of the fraction will increase which alternatively decrease the ratio.

(ii) Charging depreciation of Rs. 25,000 on machinery. The net profit in the numerator of the fraction will decrease due to depreciation charge. There will be no effect on the denominator. Therefore due to only decrease in numerator the ratio will decrease.

(iii) Redemption of debentures by cheque Rs. 2,00,000 will reduce capital employed or denominator of the ratio. There will be no effect on the profit on numerator. Therefore denominator of the fraction will decrease which alternatively increase the ratio.

(iv) Conversion of 9% Debentures of Rs. 1,00,000 into equity shares. The conversion of debentures into equity shares will not change the capital employed in the denominator of the ratio. Therefore there will be no change in ratio.

**Q135. Opening Inventory Rs. 80,000; Purchases Rs. 4,30,900; Direct Expenses Rs. 4,000; Closing Inventory Rs. 1,60,000; Administrative Expenses Rs. 21,100; Selling and Distribution Expenses Rs. 40,000; Revenue from Operations, i.e., Net Sales Rs. 10,00,000. Calculate Inventory Turnover Ratio; Gross Profit Ratio; and Opening Ratio.**

**Answer:**

**Q136. Following information is given about a company:**

**Answer:**

**Q137. 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) Rs. 1,00,000; cost of Revenue from Operations (Cost of Goods Sold) was 80% of sales; Equity Share Capital Rs. 7,00,000; General Reserve Rs. 3,00,000; Operating Expenses Rs. 10,000; Quick Assets Rs. 6,00,000; 9% Debentures Rs. 5,00,000; Closing Inventory Rs. 50,000; Prepaid Expenses Rs. 10,000 and Current Liabilities Rs. 4,00,000.**

**Answer:**

**Q138. From the following information, calculate Inventory Turnover Ratio; Operating Ratio and Working Capital Turnover Ratio:
Opening Inventory Rs. 28,000; Closing Inventory Rs. 22,000; Purchases Rs. 46,000; Revenue from Operations, i.e., Net Sales Rs. 80,000; Return Rs. 10,000; Carriage Inwards Rs. 4,000; Office Expenses Rs. 4,000; Selling and Distribution Expenses Rs. 2,000; Working Capital Rs. 40,000.**

**Answer:**

**Q139. From the following calculate:
(a) Current Ratio; and
(b) Working Capital Turnover Ratio.**

**Answer:**

**Q140. Calculate following ratios on the basis of the following information:
(i) Gross Profit Ratio;
(ii) Current Ratio;
(iii) Acid Test Ratio; and
(iv) Inventory Turnover Ratio**

**Answer:**

**Q141. Calculate following ratios on the basis of the given information:
(i) Current Ratio;
(ii) Acid Test Ratio;
(iii) Operating Ratio; and
(iv) Gross Profit Ratio.**

**Answer:**

**Q142. From the information given below, calculate any three of the following ratio:
(i) Gross Profit Ratio;
(ii) Working Capital Turnover Ratio:
(iii) Debt to Equity Ratio; and
(iv) Proprietary Ratio.**

**Answer:**

**Q143. On the basis of the following information calculate:
(i) Debt to Equity Ratio; and
(ii) Working Capital Turnover Ratio.
Information:**

**Answer:**

**Q144. From the following, calculate (a) Debt to Equity Ratio; (b) Total Assets to Debt Ratio; and (c) Proprietary Ratio:**

**Answer:**

**Q145. From the following information related to Naveen Ltd., calculate (a) Return on Investment and (b) Total Assets to Debt Ratio:
Information: Fixed Assets Rs. 75,00,000; Current Assets Rs. 40,00,000; Current Liabilities Rs. 27,00,000; 12% Debentures Rs. 80,00,000 and Net Profit before Interest, Tax and Dividend Rs. 14,50,000.**

**Answer:**

**Q146. Calculate Current Ratio, Quick Ratio and Debt to Equity Ratio from the figures given below:**

**Answer:**

**Q147. From the following information’s, calculate Return on Investment (or Return on Capital Employed):**

**Answer:**

**Working Note:-**

Net Profit before Interest, Tax and Dividend = Net Profit before Tax + Interest on 10% Long-term Borrowings

= Rs. 6,00,000 + Rs. 20,00,000 × 10/100

= Rs. 6,00,000 + Rs. 2,00,000

= Rs. 8,00,000

Capital Employed = Share Capital + Reserve and Surplus + 10% Long-term Borrowings

= Rs. 5,00,000 + Rs. 2,50,000 + Rs. 20,00,000

= Rs. 27,50,000

**Point of Knowledge:-**

Other Method to Calculate Capital Employed

Capital Employed = Net Fixed Assets + Non-Current Trade Investments + Current Assets – Current Liabilities

= Rs. 22,50,000 + Rs. 2,50,000 + Rs. 11,00,000 – Rs. 8,50,000

= Rs. 27,50,000