Time – 50 mins
M.M. - 30
Q1. 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 mark)
Q2. If operating ratio of a company is 24% what is the operating profit ratio of the company? (1 mark)
Q3. 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.
Q4. 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 marks)
(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 Rs. 24,000, calculate current assets and current liabilities.
(b) From the following information, calculate Inventory Turnover Ratio.
Revenue from Operations: Rs. 4,00,000, Average Inventory: Rs. 55,000, The rate of Gross Loss on Revenue from Operations was 10%. (4 marks)
Q6. Net profit after Interest taxes is Rs. 2,80,000,15% long term debt Rs. 8,00,000. 10% preference Share capital Rs. 4,80,000, Tax rate 30% Calculate return on capital employed and interest coverage ratio. (4 marks)
Q7. 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 marks)
Q8. From the following information, calculate the following ratios:
(i) Acid Test Ratio
(ii) Debt Equity Ratio
(iii) Working Capital Turnover Ratio
(iv) operating ratio Information: Net RFO Rs. 3,00,000; Gross Profit Rs. 1,00,000; Total Current Assets Rs. 2,00,000; Closing Inventory Rs. 20,000; Prepaid Insurance Rs. 4,000; Total Current Liabilities Rs. 1,20,000; Share Capital Rs. 3,50,000; Reserve & Surplus Rs. 40,000; Preliminary Expenses Rs. 7,000; Fixed Assets Rs. 4,30,000, selling and distribution expenses Rs. 4,000 & office and administrative expenses Rs. 6,000. (4 marks)
Q9. Current ratio- 2, Quick ratio- 1.5, Working capital- Rs. 3,00,000 Closing stock is 3 times 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 Closing stock, cost of revenue from operations and debtors velocity. (6 marks)