Class 12 Accountancy

Chapter 5 Solutions — Accounting Ratios

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Solutions

Overview

Step-by-step NCERT solutions for Accounting Ratios (Chapter 5, CBSE Class 12 Accountancy) — every question and answer worked out in full, not just the final result. You can also read the Accounting Ratios textbook chapter.

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What these solutions cover

All 31 questions in Accounting Ratios are solved in the PDF. Here's what's inside, exercise by exercise:

Short & Long Answer Questions

What do you mean by Ratio Analysis?
What are various types of ratios?
What relationships will be established to study: a. Inventory turnover, b. Trade receivables turnover, c. Trade payables turnover, d. Working capital turnover?
The liquidity of a business firm is measured by its ability to satisfy its long-term obligations as they become due. What are the ratios used for this purpose?
The average age of inventory is viewed as the average length of time inventory is held by the firm for which explain with reasons.
What are liquidity ratios? Discuss the importance of current and liquid ratio.
How would you study the Solvency position of the firm?
What are various profitability ratios? How are these worked out?
The current ratio provides a better measure of overall liquidity only when a firm's inventory cannot easily be converted into cash. If inventory is liquid, the quick ratio is a preferred measure of overall liquidity. Explain.

Numerical Questions

Following is the Balance Sheet of Raj Oil Mills Limited as at March 31, 2017. Calculate current ratio. Particulars | (Rs.) Equity and Liabilities: Shareholders' funds — Share capital: 7,90,000; Reserves and surplus: 35,000 Current Liabilities — Trade Payables: 72,000 Total: 8,97,000 Assets: Non-current Assets — Fixed assets – Tangible assets: 7,53,000 Current Assets — Inventories: 55,800; Trade…
Following is the Balance Sheet of Title Machine Ltd. as at March 31, 2017. Calculate Current Ratio and Liquid Ratio. Particulars | Amount (Rs.) Equity and Liabilities: Shareholders' funds — Share capital: 24,00,000; Reserves and surplus: 6,00,000 Non-current liabilities — Long-term borrowings: 9,00,000 Current liabilities — Short-term borrowings: 6,00,000; Trade payables: 23,40,000; Short-term…
Current Ratio is 3.5 : 1. Working Capital is Rs. 90,000. Calculate the amount of Current Assets and Current Liabilities.
Shine Limited has a current ratio 4.5 : 1 and quick ratio 3 : 1; if the inventory is 36,000, calculate Current Liabilities and Current Assets.
Current Liabilities of a company are Rs. 75,000. If current ratio is 4:1 and Liquid Ratio is 1 : 1, calculate value of Current Assets, Liquid Assets and Inventory.
Handa Ltd. has inventory of Rs. 20,000. Total liquid assets are Rs. 1,00,000 and quick ratio is 2 : 1. Calculate current ratio.
Calculate debt-equity ratio from the following information: Total Assets: Rs. 15,00,000 Current Liabilities: Rs. 6,00,000 Total Debts: Rs. 12,00,000
Calculate Current Ratio if: Inventory is Rs. 6,00,000; Liquid Assets Rs. 24,00,000; Quick Ratio 2 : 1.
Compute Inventory Turnover Ratio from the following information: Revenue from Operations: Rs. 2,00,000 Gross Profit: Rs. 50,000 Inventory at the end: Rs. 60,000 Excess of inventory at the end over inventory in the beginning: Rs. 20,000
10.
Calculate following ratios from the following information:
- (i) Current ratio
- (ii) Liquid ratio
- (iii) Operating Ratio
- (iv) Gross profit ratio Current Assets: Rs. 35,000 Current Liabilities: Rs. 17,500 Inventory: Rs. 15,000 Operating Expenses: Rs. 20,000 Revenue from Operations: Rs. 60,000 Cost of Revenue from operation: Rs. 30,000
11.
From the following information calculate:
- (i) Gross Profit Ratio
- (ii) Inventory Turnover Ratio
- (iii) Current Ratio
- (iv) Liquid Ratio
- (v) Net Profit Ratio
- (vi) Working Capital Ratio: Revenue from Operations: Rs. 25,20,000 Net Profit: Rs. 3,60,000 Cost of Revenue from Operations: Rs. 19,20,000 Long-term Debts: Rs. 9,00,000 Trade Payables: Rs. 2,00,000 Average Inventory: Rs. 8,00,000 Liquid Assets…
Compute Working Capital Turnover Ratio, Debt Equity Ratio and Proprietary Ratio from the following information: Paid-up Share Capital: Rs. 5,00,000 Current Assets: Rs. 4,00,000 Revenue from Operations: Rs. 10,00,000 13% Debentures: Rs. 2,00,000 Current Liabilities: Rs. 2,80,000
Calculate Inventory Turnover Ratio if: Inventory in the beginning is Rs. 76,250, Inventory at the end is Rs. 98,500, Sales is Rs. 5,20,000, Sales Return is Rs. 20,000, Purchases is Rs. 3,22,250.
Calculate Inventory Turnover Ratio from the data given below: Inventory in the beginning of the year: Rs. 10,000 Inventory at the end of the year: Rs. 5,000 Carriage: Rs. 2,500 Revenue from Operations: Rs. 50,000 Purchases: Rs. 25,000
A trading firm's average inventory is Rs. 20,000 (cost). If the inventory turnover ratio is 8 times and the firm sells goods at a gross profit of 20% on sales, ascertain the gross profit of the firm.
You are able to collect the following information about a company for two years: | | 2015-16 | 2016-17 | |---|---|---| | Trade receivables on Apr. 01 | Rs. 4,00,000 | Rs. 5,00,000 | | Trade receivables on Mar. 31 | — | Rs. 5,60,000 | | Stock in trade on Mar. 31 | Rs. 3,00,000 | Rs. 9,00,000 | | Revenue from operations (gross profit is 25% on cost of Revenue from operations) | — | Rs. 24,00,000 |…
17.
From the following Balance Sheet and other information, calculate following ratios:
- (i) Debt-Equity Ratio
- (ii) Working Capital Turnover Ratio
- (iii) Trade Receivables Turnover Ratio Balance Sheet as at March 31, 2017 Particulars | (Rs.) Equity and Liabilities: Shareholders' funds — Share capital: 10,00,000; Reserves and surplus: 7,00,000; Money received against share warrants: 2,00,000…
From the following information, calculate the following ratios: i) Liquid Ratio ii) Inventory turnover ratio iii) Return on investment Inventory in the beginning: Rs. 50,000 Inventory at the end: Rs. 60,000 Net Profit: Rs. 2,17,900 10% Debentures: Rs. 2,50,000 Revenue from operations: Rs. 4,00,000 Gross Profit: Rs. 1,94,000 Cash and Cash Equivalents: Rs. 40,000 Money received against share…
19.
From the following, calculate
- (a) Debt-Equity Ratio
- (b) Total Assets to Debt Ratio
- (c) Proprietary Ratio. Equity Share Capital: Rs. 75,000 Share application money pending allotment: Rs. 25,000 General Reserve: Rs. 45,000 Balance in the Statement of Profit & Loss: Rs. 30,000 Debentures: Rs. 75,000 Trade Payables: Rs. 40,000 Outstanding Expenses: Rs. 10,000
Cost of Revenue from Operations is Rs. 1,50,000. Operating expenses are Rs. 60,000. Revenue from Operations is Rs. 2,50,000. Calculate Operating Ratio.
21.
Calculate the following ratio on the basis of following information:
- (i) Gross Profit Ratio
- (ii) Current Ratio
- (iii) Acid Test Ratio
- (iv) Inventory Turnover Ratio
- (v) Fixed Assets Turnover Ratio Gross Profit: Rs. 50,000 Revenue from Operations: Rs. 1,00,000 Inventory: Rs. 15,000 Trade Receivables: Rs. 27,500 Cash and Cash Equivalents: Rs. 17,500 Current Liabilities: Rs. 40,000 Land & Building…
From the following information calculate Gross Profit Ratio, Inventory Turnover Ratio and Trade Receivable Turnover Ratio. Revenue from Operations: Rs. 3,00,000 Cost of Revenue from Operations: Rs. 2,40,000 Inventory at the end: Rs. 62,000 Gross Profit: Rs. 60,000 Inventory in the beginning: Rs. 58,000 Trade Receivables: Rs. 32,000

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