## Tuesday, January 22, 2019 Accounting Ratios Practical Problems
Current and Liquid Ratio
1. Current Ratio 2.5; Working Capital Rs. 60,000. Calculate the amount of Current Assets and Current Liabilities.
2. X Ltd. has a Current Ratio 3.5 : 1 and Quick Ratio 2 : 1. If the stock is Rs. 24,000; Calculate the total Current Liabilities and Current Assets.
3. XYZ Ltd. stock is Rs. 3,00,000. Total Liquid Assets are Rs. 12,00,000 and Quick Ratio is 2 : 1. Work out of the Current Ratio.
4. A Limited Liquidity Ratio is 2.5 : 1. Stock is Rs. 6,00,000. Current Ratio is 4 : 1. Find out the Current Liabilities.
5. Current Liabilities of a company are Rs. 6,00,000. Its Current Ratio is 3 : 1 and Liquid Ratio is 1 : 1. Calculate the value of Stock-in-Trade.
6. 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 the values of Current Assets, Liquid Assets and Inventory.
7. Current Ratio 4; Liquid Ratio 2.5; Inventory Rs. 6,00,000. Calculate the Current Liabilities, Current Assets and Liquid Assets.
8. X Ltd. had a Current Ratio of 4.5 : 1 and a Quick Ratio of 3 : 1. If its inventory is Rs. 36,000, find out its total Current Assets and Total Current Liabilities.
9. Quick assets Rs. 1,50,000; Inventory Rs. 40,000; Prepaid Expenses Rs. 10,000; Working Capital Rs. 1,20,000. Calculate Current Ratio.
10. Current Assets Rs. 3,00,000; Stock Rs. 45,000; Prepaid Expenses Rs. 15,000; Working Capital Rs. 2,52,000. Calculate the Quick Ratio. [Quick Ratio = 5 : 1]
11. From the following information, calculate Current Ratio and acid-test ratio:
 Particulars Amount Particulars Amount InventoryDebtorsCashCreditorsBills receivableAdvance TaxBills PayableBank overdraftDebenturesAccrued Interest 550004000037000480002000040002800040002000004000 Marketable securities(Short term investment)Provision for bad debtIncome received in advanceCoinsCheque and Draft in handTreasury bills PurchasedDividend payableSales tax payableProvision for taxInterest due on debentures 10000500050002000500065002000200020005000
12. Calculate Acid-Test Ratio from the following:               Current Assets Rs.50000. Current assets include the following: Stock Rs.14000. Pre-paid Expenses Rs. 1000. Current liabilities Rs.20000. Current liabilities include Bank overdraft Rs.5000.
Debt Equity Ratio, Proprietary ratio and ratio of total asset to debt:
Q. Calculate Debt Equity Ratio, Proprietary ratio and ratio of total asset to debt:
 Particulars 2012 (Rs.) 2013 (Rs.) I. EQUITY AND LIABILITIES1.       Shareholder’s Fundsa)      Share Capitalb)      Reserve and Surplus2.       Non-Current Liabilities  - Long-term Borrowings (12% Loan)3.       Current Liabilities a)      Short-term Borrowingsb)      Trade Payablesc)       Short-term Provisions 7,50,0004,50,0007,50,0001,75,0001,00,00025,000 15,00,0003,00,00012,00,0003,50,0002,00,00050,000 Total 22,50,000 36,00,000 II. ASSETS1.       Non-Current AssetsFixed Assets (Tangible)2.       Current Assetsa)      Inventoriesb)      Trade Receivablesc)       Cash and Cash Equivalents 15,00,000 2,50,0004,50,00050,000 22,50,000 4,50,0008,00,0001,00,000 Total 22,50,000 36,00,000
Stock Turnover Ratio or Inventory Turnover Ratio
1. From the following details, calculate the Inventory Turnover Ratio:
 Cost of Goods Sold Inventory in the beginning of the yearInventory at the close of the year 4,50,0001,25,0001,75,000
2. Opening Inventory Rs. 76,250; Closing Inventory Rs. 98,500; Revenue from Operations, i.e. Sales Rs. 5,20,000; Sales Returns Rs. 20,000; Purchases Rs. 3,22,250. Calculate the Stock or Inventory.
3. Calculate the Stock or Inventory Turnover Ratio from the data given below:
 Inventory in the beginning of the yearInventory at the end of the yearPurchases 20,00010,00050,000 Carriage InwardsRevenue from Operations, i.e. Sales 5,0001,00,000
4. From the following details, calculate the value of Opening Inventory.
 Closing InventoryTotal SalesTotal PurchasesGoods are sold at a profit of 25% on cost. 68,0004,80,000 (including Cash Sales Rs. 1,20,000)3,60,000 (including Credit Purchases Rs. 2,39,200)
5. Calculate the Stock or Inventory Turnover Ration from the following:
 Opening InventoryClosing InventoryRevenue from Operations, i.e. Sales 29,00031,0003,20,000
6. From the following information, determine the Opening and Closing Inventories: Inventory Turnover Ratio 5 Times, Total Sales Rs. 2,00,000, Rate of Gross Profit on Sales 25%. Inventory is more by Rs. 4,000 than the Opening Inventory.
7. Rs. 2,00,000 is the Cost of Goods Sold i.e. Cost of Revenue from Operations during 2011-12. If Inventory Turnover Ratio is 8 times, calculate the inventories at the end of the year. Inventories at the end are 1.5 times than that in the beginning.
8. Sales (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 the Stock or Inventory Turnover Ratio.
9. Cost of Goods Sold i.e. (Revenue from Operations) Rs. 5,00,000; Purchase Rs. 5,50,000; Opening Inventory Rs. 1,00,000. Calculate the Stock Turnover Ratio.
10. Following figures have been extracted from Shivalika Mills Ltd.:
Stock 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 the amount of Gross Profit and Sales (Revenue from Operations).
11. Following figures have been extracted from Shivalika Mills Ltd.:
Stock 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% Sales.
Compute the amount of Gross Profit and Sales (Revenue from Operations).
12. Stock Turnover Ratio 5 times; Cost of Goods Sold Rs. 18,90,000. Calculate the Opening Inventory and Closing Inventory if Inventory at the end is 2.5 times more than that in the beginning.            [Opening Inventory – Rs. 1,68,000 and Closing Inventory – Rs. 5,88,000]
13. Rs. 3,00,000 is the Cost of Goods Sold. Inventory Turnover Ratio 8 times; Inventory in the beginning is 2 times more than the Inventory at the end. Calculate the value of Opening and Closing Inventories.            [Opening Inventory – Rs. 56,250 and Closing Inventory – Rs. 18,750]
14. From the given information, calculate the stock Turnover Ratio: Sales = Rs. 4, 00,000; Gross Profit Ratio=25%; Opening Stock was 1/3rd of the value of the Closing stock. Closing Stock was 30% of Sales.
Debtors’ Turnover Ratio
1. Compute the Debtors’ turnover Ratio from the following:
 Gross Sales (Revenue from Operations)Debtors in the beginning of yearDebtors at the end of yearSales Return 9,00,00083,0001,17,0001,00,000 7,50,0001,17,00083,00050,000
2. Rs. 1,75,000 is the Net Sales (i.e. Revenue from Credit Sales) of a concern during 2011-12. If Debtors’ turnover Ratio is 8 times, calculate debtors in the beginning and at the end of the year. Debtors at the end is Rs. 7,000 more than that in the beginning.
Creditors’ Turnover Ratio or Payable Turnover Ratio
1. Calculate the Creditors’ Turnover Ratio for the year 2011-12 in each of the alternative cases:
Case 1: Closing Trade Payable Rs. 35,000; 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. 25,000due to a supplier of machinery) Rs. 55,000; Net Credit Purchases Rs. 3,60,000.
2. Calculate the Creditors’ Turnover Ratio and Average Debt Payment Period for the year 2011-12 from the following information:
 Sundry CreditorsBills Payable 1st April, 2011Rs.1,50,00050,000 31st March, 2012Rs.4,50,0001,50,000
Total Purchases Rs. 21,00,000; Purchases Return Rs. 1,00,000; Cash Purchases Rs. 4,00,000.
Gross Profit Ratio
1. From the following, calculate the Gross Profit Ratio:  Gross Profit: Rs. 50,000; Revenue from Operations, i.e. Sales Rs. 5,50,000; Sales Return: Rs. 50,000.
2. (i) Compute the Gross Profit Ratio from the following information: Cost of Goods Sold Rs. 5,40,000; Net Sales (Revenue from Operation) Rs. 6,00,000; Sales Return Rs. 10,000.
(ii) Compute the Gross Profit Ratio from the following information: Revenue from Operations, i.e. Sales = Rs. 4,00,000; Gross Profit 25% on Cost.
3. (i) Revenue from Operations: Cash Sales Rs. 4,20,000; Credit Sales Rs. 6,00,000; Return Rs. 20,000. Cost of Goods Sold Rs. 8,00,000. Calculate the Gross Profit Ratio.
(ii) Average Inventory Rs. 1,60,000; Stock Turnover Ratio 6 Times; Selling Price 25% above cost. Calculate the Gross Profit Ratio.
(iii) Opening Inventory Rs. 1,00,000; Closing Inventory Rs. 60,000; Stock Turnover Ratio 8 Times; Selling Price 25% above cost. Calculate the Gross Profit Ratio.
Operating Ratio
1. 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 the Operating Ratio.
2. From the following details, calculate the Operating Ratio:
 Cost of Goods SoldOperating Expenses Rs.52,00018,000 Revenue from Operations (Sales)Sales Return Rs.88,0008,000
3. Operating Ratio 92%; Operating Expenses Rs. 94,000; Revenue from Operations, i.e. Sales Rs. 6,00,000; Sales Return Rs. 40,000. Calculate the Cost of Goods Sold.
4. (i) Cost of Goods Sold Rs. 2,20,000; Net Revenue from Operations i.e. Sales Rs. 3,20,000; Selling Expenses             Rs. 12,000; Office Expenses Rs. 8,000; Depreciation Rs. 6,000. Calculate the Operating Ratio.
(ii) Net Revenue from Operations, i.e. 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 the Operating Ratio.
Operation Profit Ratio
1. Calculate the Operating Profit Ratio in each of the following alternatives cases:
Case 1: Sales (Net Revenue from Operations) Rs. 10,00,000; Operating Profit Rs. 1,50,000.
Case 2: Sales (Net Revenue from Operations) Rs. 6,00,000; Operating Cost Rs. 5,10,000.
Case 3: Sales (Net Revenue from Operations) Rs. 3,60,000; Gross Profit 20% on sales; Operating Expense Rs. 18,000.
Case 4: Sales (Net Revenue from Operations) Rs. 4,50,000; Cost of Goods Sold Rs. 3,60,000; Operating Expenses Rs. 22,500.
Case 5: Cost of Goods Sold Rs. 8,00,000; Gross Profit 20% on Sales; Operating Expenses Rs. 50,000.

#### 1 comment:

1. THANK YOU. But it would be more helpful, if you provide the answers too. Not expecting the whole solved answer , but only the final digits in the bracket. It will help us to ensure whether we are correct or wrong.

Kindly give your valuable feedback to improve this website.