Question:101
Calculate Working Capital Turnover Ratio from the following information:
Revenue from Operations 30,00,000; Current Assets 12,50,000; Total Assets 20,00,000; Noncurrent Liabilities 10,00,000, Shareholders' Funds 5,00,000.
Solution:
Question:102
A company earns Gross Profit of 25% on cost. For the year ended 31st March, 2017 its Gross Profit was 5,00,000; Equity Share Capital of the company was 10,00,000; Reserves and Surplus 2,00,000; Longterm Loan 3,00,000 and Noncurrent Assets were 10,00,000.
Compute the 'Working Capital Turnover Ratio' of the company.
Working Capital Turnover Ratio= Revenue from Operation/Working Capital
Solution:
Gross Profit = 25% on Cost
Let the Cost of Goods sold be 100.
Gross Profit = 25
Revenue from Operations = 100 + 25 = 125
When Gross profit is 25, revenue from operations is = 125
And, if Gross profit is 5,00,000 then revenue from operations will be = 5,00, 000 × 125/25 = 25,00,000
Capital Employed = Shareholder’s Funds + NonCurrent Liabilities
= 10,00,000 + 2,00,000 + 3,00,000
= 15,00,000
Also, Capital Employed = Non Current Assets + Working Capital
Alternatively, Working Capital = Capital Employed – Noncurrent Assets = 15,00,000– 10,00,000
= 5,00,000
Hence, Working Capital Turnover Ratio= 25,00,000/5,00,000= 5 times
Question:103
Compute Gross Profit Ratio from the following information:
Cost of Revenue from Operations Cost of Goods Sold
5,40,000; Revenue from Operations Net Sales
6,00,000.
Solution:
Gross Profit = Revenue from Operations – Cost of Revenue from Operations
= 6,00,000 – 5,40,000
= Rs 60,000
Question:104
From the following, calculate Gross Profit Ratio:
Gross Profit:50,000; Revenue from Operations 5,00,000; Sales Return: 50,000.
Solution:
Net Sales = Rs 5, 00, 000Gross Profit = Rs 50, 000
Note: Here we will not deduct the amount of sales return because the amount of net sales has already been provided in the question.
Question:105
Compute Gross Profit Ratio from the following information:
Revenue from Operations, i.e., Net Sales = 4,00,000; Gross Profit 25% on Cost.
Solution:
Question:106
Calculate Gross Profit Ratio from the following data:
Cash Sales are 20% of Total Sales; Credit Sales are 5,00,000; Purchases are 4,00,000; Excess of Closing Inventory over Opening Inventory 25,000.
Solution:
Credit Sales = 5,00,000
Cash sales = 20% of Total Sales
Let Total Sales be ‘x’
Therefore, Cash Sales = 20% of x
Total Sales = Cash Sales + Credit Sales
Cost of Goods Sold = Purchases – Excess of Closing Stock over Opening Stock
= Rs 4,00,000 – Rs 25,000 = Rs 3,75,000
Gross Profit = Total Sales – Cost of Goods Sold
= Rs 6,25,000 – 3,75,000 = Rs 2,50,000
Question:107
From the following information, calculate Gross Profit Ratio:
Credit Sales 5,00,000
Decrease in Inventory 10,000
Purchases 3,00,000
Returns Outward 10,000
Carriage Inwards 10,000
Wages 50,000
Rate of Credit Sale to Cash Sale 4:1
Solution:
Credit Sale = Rs 5,00,000
Rate of Credit Sale to Cash Sale = 4:1
Total Sales = Cash Sales + Credit Sales = Rs 1,25,000 + Rs 5,00,000 = Rs 6,25,000
Cost of Goods Sold = Purchases – Return Outward + Carriage Inwards + Wages + Decrease in Inventory
= Rs 3,00,000 – Rs 10,000 + Rs 10,000 + Rs 50,000 + Rs 10,000
= Rs 3,60,000
Gross Profit = Total Sales – Cost of Goods Sold
= Rs 6,25,000 – Rs 3,60,000 = Rs 2,65,000
Question: 108
Calculate Gross Profit Ratio from the following data:
Average Inventory 3,20,000; Inventory Turnover Ratio 8 Times; Average Trade Receivables 4,00,000; Trade Receivables Turnover Ratio 6 Times; Cash Sales 25% of Net Sales.
Solution:
Inventory Turnover Ratio = 8 times
Average Inventory = Rs 3,20,000
Cost of Goods sold = 25,60,000
Trade Receivables Turnover Ratio = 6 times
Average Trade Receivables = Rs 4,00,000
Net Credit Sales = 24,00,000
Total Sales = Cash Sales + Credit Sales
Total Sales = 25% of Total Sales + Credit Sales
75% of Total Sales = 24,00,000
Gross Profit = Total Sales – Cost of Goods Sold
= 32,00,000 – 25,60,000 = 6,40,000
Question:109
i. Revenue from Operations: Cash Sales 4,20,000; Credit Sales 6,00,000; Return 20,000. Cost of Revenue from Operations or Cost of Goods Sold 8,00,000. Calculate Gross Profit Ratio.
ii. Average Inventory 1,60,000; Inventory Turnover Ratio is 6 Times; Selling Price 25% above cost. Calculate Gross Profit Ratio.
iii. Opening Inventory 1,00,000; Closing Inventory 60,000; Inventory Turnover Ratio 8 Times; Selling Price 25% above cost. Calculate Gross Profit Ratio.
Solution:
Question:110
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 StockinTrade 50,000.
ii. Purchases Return 15,000.
iii. Cash Sale of StockinTrade 40,000.
iv. StockinTrade costing 20,000 withdrawn for personal use.
v. StockinTrade costing 15,000 distributed as a free sample.
Solution:
Question:111
Cost of Revenue from Operations Cost of Goods Sold
3,00,000. Operating Expenses 1,20,000. Revenue from Operations: Cash Sales 5,20,000; Return 20,000. Calculate Operating Ratio.
Solution:
Question:112
Operating Ratio 92%; Operating Expenses 94,000; Revenue from Operations 6,00,000; Sales Return 40,000. Calculate Cost of Revenue from Operations Cost of Goods Sold.
Solution:
Operating Cost = Cost of Goods Sold + Operating Expenses
5,52,000 = Cost of Goods Sold + 94,000
Cost of Goods Sold = Rs 4,58,000
*Note: Sales Return will not be considered since net sales are given which means sales return have already been adjusted in the sales figure.
Question:113
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 12,000; Office Expenses 8,000; Depreciation 6,000. Calculate Operating Ratio.
ii. Revenue from Operations, Cash Sales 4,00,000; Credit Sales 1,00,000; Gross Profit 1,00,000; Office and Selling Expenses 50,000. Calculate Operating Ratio.
Solution:
Cost of Goods Sold = 2,20,000
Operating Cost = Cost of Goods Sold + Operating Expenses
Operating Cost = 2,20,000 + 26,000 = 2,46,000
Sales = 3,20,000
Question:114
From the following information, calculate Operating Ratio:
Cost of Revenue from Operations Cost of Goods Sold 52,000
Revenue from Operation Gross Sales 88,000
Operating Expenses 18,000
Sales Return 8,000
Solution:
Net Sales = Gross Sales  Sales Return = 88, 000  8, 000 = Rs 80, 000
Question:115
Calculate Cost of Revenue from Operations from the following information:
Revenue from Operations 12,00,000; Operating Ratio 75%; Operating Expenses 1,00,000.
Solution:
Revenue from Operations Net Sales = Rs 12, 00, 000
Operating Ratio = 75%
Operating Expenses = Rs 1, 00, 000
Find out: Cost of Revenue from Operations
Operating Ratio =
Question:116
Calculate Operating Ratio from the following information:
Operating Cost 6,80,000; Gross Profit 25%; Operating Expenses 80,000.
Solution:
Given: Operating Cost = Rs 6, 80, 000
Operating Expenses = Rs 80, 000
Gross Profit Ratio = 25 %
Find out: Operating Ratio
Operating Cost = Cost of Revenue from Operations + Operating Expenses
Question:117
Calculate Operating Profit Ratio from the following information:
Opening Inventory 1,00,000
Closing Inventory 1,50,000
Purchases 10,00,000
Loss by fire 20,000
Revenue from Operations, i.e., Net Sales 14,70,000
Dividend Received 30,000
Administrative and Selling Expenses 1,70,000
Solution:
Cost of Goods Sold = Opening Inventory + Purchases – Closing Inventory
= 1,00,000 + 10,00,000 – 1,50,000 = 9,50,000
Operating Expenses = Administrative and Selling Expenses = 1,70,000
Operating Cost = Cost of Goods Sold + Operating Expenses
= 9,50,000 + 1,70,000 = 11,20,000
Net Sales = 14,70,000
Operating Profit Ratio = 100 – Operating Ratio = 100 – 76.19 = 23.81%
Question:118
Calculate Operating Profit Ratio from the Following:
Revenue from Operations Net Sales 5,00,000
Cost of Revenue from Operations Cost of Goods Sold 2,00,000
Wages 1,00,000
Office and Administrative Expenses 50,000
Interest on Borrowings 5,000
Solution:
Cost of Goods Sold = 2,00,000
Operating Expenses = Office and Administrative Expenses = 50,000
Operating Cost = Cost of Goods Sold + Operating Expenses
= 2,00,000 + 50,000 = 2,50,000
Net Sales = 5,00,000
Operating Profit Ratio = 100 – Operating Ratio = 100 – 50 = 50%
Question:119
What will be the Operating Profit Ratio, if the Operating Ratio is 82.59%?
Solution:
Operating Ratio = 82.59%
Operating Ratio + Operating Profit Ratio = 100%
Operating Profit Ratio = 100% − 82.59% = 17.41%
Question:120
Calculate Operating Profit Ratio,in each of the following alternative cases:
Case 1: Revenue from Operations Net Sales 10,00,000; Operating Profit 1,50,000.
Case 2: Revenue from Operations Net Sales 6,00,000; Operating Cost 5,10,000.
Case 3: Revenue from Operations Net Sales 3,60,000; Gross Profit 20% on Sales; Operating Expenses 18,000
Case 4: Revenue from Operations Net Sales 4,50,000; Cost of Revenue from Operations 3,60,000; Operating Expenses 22,500.
Case 5: Cost of Goods Sold, i.e., Cost of Revenue from Operations 8,00,000; Gross Profit 20% on Sales; Operating Expenses 50,000.
Solution:
Question:121
Revenue from Operations 9,00,000; Gross Profit 25% on Cost; Operating Expenses 45,000. Calculate Operating Profit Ratio.
Solution:
Question:122
Operating Cost 3,40,000; Gross Profit Ratio 20%; Operating Expenses 20,000. Calculate Operating Profit Ratio.
Solution:
Cost of Revenue from Operations = Operating Cost  Operating Expenses = 3,40,000  20,000 = Rs 3,20,000 3,20,000 × 20
Revenue from Operations = Cost of Revenue from Operations + Gross Profit
=3,20,000+80,000 = Rs 4,00,000
Operating Profit = Revenue from Operations  Operating Cost
= 4, 00, 000 − 3, 40, 000 = Rs 60,000
Question:123
Cash Sales 2,20,000; Credit Sales 3,00,000; Sales Return 20,000; Gross Profit 1,00,000; Operating Expenses 25,000; Nonoperating incomes 30,000; Nonoperating Expenses 5,000. Calculate Net Profit Ratio.
Solution:
Question:124
Revenue from Operations, i.e., Net Sales 6,00,000. Calculate Net Profit Ratio.
Solution:
Net Sales = 6,00,000
Net profit = 60,000
Question:125
Revenue from Operations, i.e., Net Sales 8,20,000; Return 10,000; Cost of Revenue from Operations Cost of Goods Sold 5,20,000; Operating Expenses 2,09,000; Interest on Debentures 40,500; Gain Profit on Sale of a Fixed Asset 81,000. Calculate Net Profit Ratio.
Solution:
Net Sales = Rs 8, 20, 000
Gross Profit = Net Sales  Cost of Goods Sold
= 8, 20, 000  5, 20, 000
= Rs 3, 00, 000
Net Profit = Gross Profit  Operating Expenses  Interest on Debentures + Profit on Sale of Fixed Asset
= 3, 00, 000  2, 09, 000  40, 500 + 81, 000
= Rs 1, 31, 500
Question:126
Revenue from Operations 4,00,000; Gross Profit Ratio 25%; Operating Ratio 90%. Nonoperating Expenses 2,000; Nonoperating Income 22,000. Calculate Net Profit Ratio.
Solution:
Net Profit = Operating Profit + Non Operating Incomes  Non Operating Expenses
= 40,000+22,000 2,000 = Rs 60,000
Operating Profit Ratio = 100 − Operating Ratio =10090 =10%
Operating Profit = 4, 00, 000 × 10% = Rs 40,000
Question:127
Calculate Return on Investment ROI
from the following details: Net Profit after Tax 6,50,000; Rate of Income Tax 50%; 10% Debentures of 100 each 10,00,000; Fixed Assets at cost 22,50,000; Accumulated Depreciation on Fixed Assets up to date 2,50,000; Current Assets 12,00,000; Current Liabilities 4,00,000.
Solution:
Net Fixed Assets = Fixed Assets at cost
− Accumulated Depreciation
= 22,50,000 − 2,50,000 = 20,00,000
Capital Employed = Net Fixed Assets + Current Assets − Current Liabilities
= 20,00,000 + 12,00,000 − 4,00,000
= 28,00,000
Interest on 10% Debentures = 10% of 10,00,000 = 1,00,000
Let Profit before Tax be = x
Profit after Tax = Profit Before Tax − Tax
Tax Rate = 50%
∴ Tax = 0.5 x
x − 0.5 x = 6,50,000
x = 13,00,000
Net Profit before Tax = x = 13,00,000
Profit before Interest and Tax = Profit before Tax + Interest on Longterm Debt
= 13,00,000 + 1,00,000
= 14,00,000
Question:128
Net Profit before Interest and Tax 2,50,000; Capital Employed 10,00,000. Calculate Return on Investment.
Solution:
Net Profit before Interest and Tax = 2,50,000
Capital Employed = 10,00,000
Question:129
Net Profit before Interest and Tax 6,00,000; Net Fixed Assets 20,00,000; Net Working Capital 10,00,000; Current Assets 11,00,000. Calculate Return on Investment.
Solution:
Net Profit before Interest and Tax = 6,00,000
Capital Employed = Net Fixed Assets + Net Working Capital
= 20,00,000 + 10,00,000 = 30,00,000
Question:130
Net Profit before Interest and Tax 4,00,000; 15% Longterm Debt 8,00,000; Shareholders' Funds 4,00,000. Calculate Return on Investment.
Solution:
Net Profit before Interest and Tax = 4,00,000
Capital Employed = 15% longterm Debt + Shareholders’ Funds
= 8,00,000 + 4,00,000 = 12,00,000
Question:131
y Ltd.'s profit after interest and tax was 1,00,000. Its Current Assets were 4,00,000; Current Liabilities 2,00,000; Fixed Assets 6,00,000 and 10% Longterm Debt 4,00,000. The rate of tax was 20%. Calculate 'Return on Investment' of Y Ltd.
Solution:
Return on Investment = Net Profit before Interest, Tax and Dividend/Capital Employed × 100
Let Profit before tax be Rs 100
Tax = Rs 20
Profit after tax = 100 – 20 = 80
If Profit after tax is Rs 80 then profit before tax is = Rs 100
If Profit after tax is Rs 1,00,000 then profit before tax is = Rs 1, 00, 000 × 100/80 = 1,25,000
Interest on longterm borrowings = Rs 4, 00, 000 × 10/100 = Rs 40,000
Profit after interest and Tax = Rs 1,25,000 + 40,000 = Rs 1,65,000
Capital Employed = Fixed Assets + Current Assets – Current Liabilities
= 6,00,000 + 4,00,000 – 2,00,000
= 8,00,000
Return on Investment = 1,65,000/8,00,000 × 100 = 20.625% or 20.63%
approx.
Question:132
From the following Balance Sheet of Global Ltd., you are required to calculate Return on Investment for the year 201819:
Solution:
Return on Investment = (Net Profit before Interest, Tax and Dividend/ Capital Employed × 100)
Interest on borrowings = ₹ (16,00,000 × 15/100)= ₹ 2,40,000
Net Profit before Tax = ₹ 9,72,000
Net Profit before Interest and Tax = ₹ (9,72,000 + 2,40,000) = ₹ 12,12,000
Net Profit before Interest and Tax (excluding interest on Nontrade investments) = ₹ (12,12,000 – 12,000) = ₹ 12,00,000
Capital Employed = Shareholder’s Funds + NonCurrent Liabilities – NonTrade Investment
= ₹ (5,00,000 + 4,20,000 + 16,00,000 – 1,20,000) = ₹ 24,00,000
Return on Investment = (12,00,000/24,00,000 × 100) = 50%
Question:133
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 201819 with reference to Opening Capital Employed.
Solution:
Return on Investment = (Net Profit before Interest, Tax and Dividend/ Capital Employed × 100)
Interest on borrowings = ₹ (24,00,000 × 15/100) = ₹3,60,000
Net Profit before Interest and Tax = Net Profit after tax + Interest on borrowings – Interest received on Nontrade Investments
= ₹ (14,58,000 + 3,60,000 – 18,000) = ₹ 18,00,000
Opening Capital Employed = Shareholder’s Funds (Opening) + NonCurrent Liabilities (Opening) – NonTrade Investment
= ₹(7,50,000 + 6,30,000 + 24,00,000 – 1,80,000) = ₹36,00,000
Return on Investment = (18,00,000/36,00,000 × 100) = 50%
Question:134
State with reason whether the following transactions will increase, decrease or not change the 'Return on Investment' Ratio:
(i) Purchase of machinery worth ₹10,00,000 by issue of equity shares.
(ii) Charging depreciation of ₹25,000 on machinery.
(iii) Redemption of debentures by cheque ₹2,00,000.
(iv) Conversion of 9% Debentures of ₹1,00,000 into equity shares.
Solution:
Question:135
Opening Inventory ₹80,000; Purchases ₹4,30,900; Direct Expenses ₹4,000; Closing Inventory ₹1,60,000; Administrative Expenses ₹21,100; Selling and Distribution Expenses ₹40,000; Revenue from Operations, i.e., Net Sales ₹10,00,000. Calculate Inventory Turnover Ratio; Gross Profit Ratio; and Opening Ratio.
Solution:
(i) Opening Inventory = 80,000
Closing Inventory = 1,60,000
Cost of Goods Sold = Opening Inventory + Purchases + Direct Expenses − Closing Inventory
= 80,000 + 4,30,900 + 4,000 − 1,60,000
= 3,54,900
(ii) Sales = 10,00,000
Gross Profit = Net Sales − Cost of Goods Sold
= 10,00,000 − 3,54,900 = 6,45,100
(iii) Operating Expenses = Administration Expenses + Selling and Distribution Expenses
= 21,100 + 40,000 = 61,100
Question:136
Following information is given about a company:
From the above information, calculate following ratios:
(i) Gross Profit Ratio,
(ii) Inventory Turnover Ratio, and
(iii) Trade Receivables Turnover Ratio.
Solution:
(i) Sales = 1,50,000
Gross Profit = 30,000
(ii) Opening Inventory = 29,000
Closing Inventory = 31,000
(iii)
Question:137
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.
Solution:
(i) Current Assets = Quick Assets + Closing Stock + Prepaid Expenses
= 6,00,000 + 50,000 + 10,000 = 6,60,000
Current Liabilities = 4,00,000
(ii) Longterm Debts = 9% Debentures = 5,00,000
Shareholder’s Funds = Equity Share Capital + General Reserve
= 7,00,000 + 3,00,000 = 10,00,000
(iii) Sales = 1,00,000
Cost of Goods Sold = 80% of Sales = 80,000
Operating Expenses = 10,000
Question:138
From the following information, calculate Inventory Turnover Ratio; Operating Ratio and Working Capital Turnover Ratio:
Opening Inventory ₹ 28,000; Closing Inventory ₹ 22,000; Purchases ₹ 46,000; Revenue from Operations, i.e., Net Sales ₹ 80,000; Return ₹10,000; Carriage Inwards ₹ 4,000; Office Expenses ₹ 4,000; Selling and Distribution Expenses ₹ 2,000; Working Capital ₹ 40,000.
Solution:
(i) Opening Inventory = 28,000
Closing Inventory = 22,000
Cost of Goods Sold = Opening Inventory + Purchases + Carriage Inwards − Closing Inventory
= 28,000 + 46,000 + 4,000 − 22,000 = 56,000
(ii) Operating Expenses = Office Expenses + Selling and Distribution Expenses
= 4,000 + 2,000 = 6,000
(iii) Working Capital = 40,000
*Note: Sales return will not be considered as the amount of net sales is provided in the question.
Question:139
From the following calculate:
(a) Current Ratio; and
(b) Working Capital Turnover Ratio.
Solution:
Question:140
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.
Solution:
Question:141
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.
Solution:
(i) Current Assets = 70,000
Current Liabilities = 35,000
(ii) Liquid Assets = Current Assets − Inventory
= 70,000 − 30,000 = 40,000
(iii) Net Sales = 1,20,000
Operating Cost = Cost of Goods Sold + Operating Expenses
= 60,000 + 40,000 = 1,00,000
(iv) Gross Profit = Net Sales − Cost of Goods Sold
= 1,20,000 − 60,000 = 60,000
Question:142
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.
Solution:
(i) Net Sales = 5,00,000
Cost of Goods Sold = 3,00,000
Gross Profit = Net Sales − Cost of Goods Sold
= 5,00,000 − 3,00,000 = 2,00,000
(ii) Current Assets = 2,00,000
Current Liabilities = 1,40,000
Working Capital = Current Assets − Current Liabilities
= 2,00,000 − 1,40,000 = 60,000
(iii) Longterm Debts = 13% Debentures = 1,00,000
Equity = Paidup Share Capital = 2,50,000
(iv) Total Assets = Total Liabilities
= Current Liabilities + Paidup Share Capital + 13% Debentures
= 1,40,000 + 2,50,000 + 1,00,000
= 4,90,000
Question:143
On the basis of the following information calculate:
(i) Debt to Equity Ratio; and
(ii) Working Capital Turnover Ratio.
Solution:
(i) Longterm Debts = 6% Debentures + 9% Loan from Bank
= 3,00,000 + 7,00,000 = 10,00,000
Equity = Paidup Share Capital + Debenture Redemption Reserve
= 17,00,000 + 3,00,000 = 20,00,000
(ii) Current Assets = Other Current Assets + Inventory
= 8,00,000 + 1,00,000
= 9,00,000
Working Capital = Current Assets − Current Liabilities
= 9,00,000 − 4,00,000
= 5,00,000
Net Sales = Cash Sales + Credit sales
= 40,00,000 + 20,00,000
= 60,00,000
Question:144
From the following, calculate (a) Debt to Equity Ratio; (b) Total Assets to Debt Ratio; and (c) Proprietary Ratio:
Solution:
Question:145
From the following information related to Naveen Ltd., calculate (a) Return on Investment and (b) Total Assets to Debt Ratio:
Information: Fixed Assets ₹ 75,00,000; Current Assets ₹ 40,00,000; Current Liabilities ₹ 27,00,000; 12% Debentures ₹ 80,00,000 and Net Profit before Interest, Tax and Dividend ₹ 14,50,000.
Solution:
Question:146
Calculate Current Ratio, Quick Ratio and Debt to Equity Ratio from the figures given below:
Solution:
(i) Current Assets = Inventory + Prepaid Expenses + Other Current Assets
= 30,000 + 2,000 + 50,000 = 82,000
Current Liabilities = 40,000
(ii) Liquid Assets = Current Assets − Inventory − Prepaid Expenses
= 82,000 − 30,000 − 2,000 = 50,000
(iii) Longterm Debts = 12% Debentures = 30,000
Equity = Accumulated Profits + Equity Share Capital
= 10,000 + 1,00,000 = 1,10,000
Question:147
From the following informations, calculate Return on Investment (or Return on Capital Employed):
Solution:
Net Profit before tax = 6,00,000
Net Profit before interest, tax and dividend = Net Profit before tax + Interest on longterm borrowings
= 6,00,000 + 10% of 20,00,000 = 6,00,000 + 2,00,000 = 8,00,000
Capital Employed = Share Capital + Reserves and Surplus + Longterm borrowings
= 5,00,000 + 2,50,000 + 20,00,000 = 27,50,000
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