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Delhi Institute of Commerce and Economics
1 Delhi Institute of Commerce and Economics
Ratios
Test
Time – 50 mins M.M.- 30
1. The current ratio of the company is 2.5:1. State giving reasons whether declaration of dividend will
improve, reduce or not change the ratio. 1
2. If operating ratio of a company is 24% what is the operating profit ratio of the company? 1
3. Find debt equity and proprietary ratio and also comment upon the financial position of the business
Total assets Rs.50,000
Total debt Rs. 20,000
Equity Rs. 10,000 3
4. What will be the impact of the following transactions on debt equity ratio-.8:1
Sale of fixed assets at a profit
Declaration of dividend
Payment of dividend for dividend already declared 3
5. a) X Ltd. has a current ratio of 3.5:1 and quick ratio of 2:1. If excess of current assets over quick assets
represented by Inventory is 24,000, calculate current assets and current liabilities.
b) From the following information, calculate Inventory Turnover Ratio.
Revenue from Operations: 4,00,000, Average Inventory : 55,000, The rate of Gross Loss on
Revenue from Operations was 10%. 4.
6. Net profit after Interest taxes is Rs2,80,000,15% long term debt Rs8,00,000. 10% preference Share
capital Rs4,80,000, Tax rate 30% Calculate return on capital employed and interest coverage ratio. 4
7. A company’s Stock Turnover is 5 times. Stock at the end is Rs. 20,000 more than that at the
beginning. Revenue from operations are Rs. 8,00,000. Rate of Gross Profit on cost 1/4; Current
Liabilities Rs. 2,40,000. Acid Test Ratio 0.75. Calculate Current Ratio 4
8. From the following information, calculate the following ratios: 4
(i) Acid Test Ratio (ii) Debt Equity Ratio (iii) Working Capital Turnover Ratio (iv) operating ratio
Information:
Net RFO 3,00,000; Gross Profit 1,00,000; Total Current Assets 2,00,000; Closing Inventory 20,000;
Prepaid Insurance 4,000; Total Current Liabilities 1,20,000; Share Capital 3,50,000; Reserve &
Surplus 40,000; Preliminary Expenses 7,000; Fixed Assets 4,30,000, selling and distribution
expenses Rs.4,000 & office and administrative expenses Rs.6,000.
9. Current ratio- 2,Quick ratio- 1.5,Working capital- rs.3,00,000 Closing stock is 3times more than the
opening stock, Average age of inventory 73 days, Gross profit is 10% of revenue from operations, Cash
revenue from operations is ¼ of credit revenue from operations, Average debtors-Rs.50000.Find Cl. stock,
cost of revenue from operations and debtors velocity. 6
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