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Ratio analysis | part 2 | Solution of old is gold

solution of old is gold of accout ratio analysis part 2

 Ratio analysis Part 2 | Solution of old is gold

(2071 Supp.- 2066 supp.)

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 2071 Supp. B Q. No. 15

a)    Current ratio = (current assets)/(current liabilities)

                             = 350000 / 150000

                             = 2.33:1

Working note

Current assets = Closing stock + Sundry debtors + Bank balance

                           = 200000 + 100000 + 50000

                           = 350000

Current liabilities = Short term loan + Salary due

                                = 100000 + 50000

                               = 150000

b)    Fixed assets turnover ratio = Sales / Net fixed assets

                                 = 1000000/ 500000

                                 = 2 times

c)     Inventory turnover ratio = Sales / Closing stock

                                 = 1000000 / 200000

                               = 5 times

d)    Return on assets = (NPAT + Interest) / Total assets

                              = (1700000 + 30000)/850000

                              = 200000 / 850000

                             = 23.52 %

Working note

Net profit = 1000000

(-) Interest on debenture 30000

Total asset = Total assets – Preliminary expenses

              = 950000 – 100000

           = 850000

e)     Debt-equity ratio = (Long term debts / Shareholder’s fund)

                                    = 200000 / 500000

                                   = 40%

Working note

Long term debts = 15 % debenture

                            = 200000

Shareholder’s fund = Share capital + Profit and loss a/c – preliminary expenses

                           = 500000 + 100000 - 100000

                          = 500000

2071 Set C Q. No. 15

(a)             Current ratio = (current assets) / (current liabilities)

                             = 250000 / 150000

                            = 1.677:1

Working note

Current assets = Accounts receivable + Cash + Bills receivable + Inventories

               = 130000 + 20000+ 30000 + 70000

              = 250000

Current liabilities = Bills payable + Account payable

              = 50000 + 100000

           = 150000

(b)            Liquid ratio = (Liquid assets) / (Current liabilities)

      = 180000 / 150000

      = 1.2:1

Working note

Liquid assets = Current assets – Inventories

= 250000 – 70000

= 180000

(c)             Debt-equity ratio = (Long term debts / Shareholder’s fund) *100

                                  = (40000 / 450000)*100

                                  = 8.89%

Working note

Long-term debts = 10% debenture

                               = 40000

Shareholder’s fund = Share capital + Retaining earning – preliminary expenses

= 400000 + 60000 – 10000

= 450000

(d)            Inventory turnover ratio = Sales / Closing stock

                                                     = 650000 / 70000

                                                   = 9.28 times

Note: The question hasn’t given gross profit neither sales in this condition we consider the cost of goods sold as sales and net profit as a gross profit

 

(e)             Earnings per share = (NPAT – Pref. Dividend) / No. of common shares

          = (60000 – 0) / 4000

         = Rs. 15

 

2071 Set D Q. No. 15

(a)             Quick ratio = (Quick Assets) / (Current liabilities)

              = 260000 / 260000

              = 1:1

Working note

Quick assets = Debtors + cash

                       = 160000 + 100000

                       = 260000

Current liabilities = Current liabilities

                                 = 260000

(b)            Debtors turnover ratio = Net sales / Debtors

                           = 800000 / 160000

                             = 5 times

(c)             Debt-equity ratio = (Long term debts / Shareholder’s fund)

                             = 300000 / 1350000

                             = 22.22%

Working note

Long term debts = Debenture

                                = 300000

Shareholder’s fund = Capital + Reserve + Profit & loss a/c

                                = 1000000 + 200000 + 150000

                                = 1350000

(d)            Fixed assets turnover ratio = Sales / Net fixed assets

                                   = 800000 / 1200000

                                  = 0.667 times

(e)             Return on total assets = (NPAT – Interest) / Total assets

                                  =

  2071 Supp. Q. No. 15

(a)             Debt-equity ratio = (Long term debts / Shareholder’s fund)*100

                                    = (250000 / 5000000)*100

                                    = 50%

Working note

Long term debts =Long term loan

                               = 250000

Shareholder’s fund = Share capital

                                   = 500000

(b)            Current ratio = (current assets) / (current liabilities)

= 400000/250000

=1.60:1

(c)             Return on total assets = ((NPAT – Interest) / Total assets)*100

= (90000 / 100000) *100

= 9%

(d)            Return on capital employed = ((NPAT – Interest) / Capital employed)

= (90000 / 750000)*100

= 12%

Working note

Capital employed = LTD + SE

                                = 250000 + 500000

                                = 750000

2070 Set C. Q. No. 15

a)    Current ratio = (current assets)/(current liabilities)

1.5 = 300000 / Current liabilities

1.5 Current liabilities = 300000

Current liabilities = 200000

Working note

Current assets = Debtors + Inventory + Bills receivable

= 150000 + 100000 + 50000

= 300000

b)    Debt-equity ratio = (Long term debts / Shareholder’s fund)*100

                                    = (200000 / 600000) * 100

                                      = 33.33%

 

Working note

Long term debt = 8 % debenture

                            = 200000

Shareholder’s fund = Share capital + Profit and loss account

                         = 500000 + 100000

                         = 600000

c)     Inventory turnover ratio = Sales / Closing stock

                         = 650000 / 100000

                         = 6.5 times

 

d)    Liquid ratio = Liquid assets / Current liabilities

                      = 200000 / 200000

                      = 1:1

Working note

Liquid assets = Current assets – Inventory

                         = 300000 – 100000

                         = 200000

  2070 Set D. Q. No. 15

a)    Current ratio = (current assets)/(current liabilities)

2 = Current assets / 150000

Current assets = 300000

 

Working note

Current liabilities = Outstanding salary + Creditors

                                 = 10000 + 140000

                                 = 150000

 

b)    Inventory turnover ratio = Sales / Closing stock

= 700000 / 50000

           = 14 times

c)     Liquid ratio = (Liquid assets) / (Current liabilities)

                           = 250000 / 150000

                           = 1.667 : 1

Working note

Liquid assets = Current assets – closing stock

                         = 300000 – 50000

                         = 250000

d)    Return on fixed assets = (NPAT – Interest) / Fixed assets

                      = 100000 / 500000

                      = 20%

2069 Supp. Set A Q. No. 15

a)    Current ratio = (current assets)/(current liabilities)

                            = 400000 / 125000

                             = 3.2 : 1

Working note

Current assets = Closing stock + Debtors + Cash in hand

                           = 200000 + 150000 + 50000

                           = 400000

Current liabilities = Bills payable + Sundry creditors

                           = 25000 + 100000

                           = 125000

 

b)    Quick ratio = Quick assets / Current liabilities

                     = 200000 / 125000

                     = 1.6:1

         

Working note

 

Quick assets = Current assets – Inventory

                       = 400000 – 200000

                       = 200000

 

c)     Inventory turnover ratio = Sales / closing stock

Or, 5 = Sales / 200000

Sales = Rs. 1000000

 

d)    Fixed assets turnover ratio = Net sales / Fixed assets

Or, 2.5 = 1000000 / Fixed assets

Or, 2.5 Fixed assets = 1000000

Fixed assets = Rs. 400000

 

2069 Supp. Set B Q. No. 15

a)    Current ratio = (current assets)/(current liabilities)

Or, 2 = 400000 / Current liabilities

Or, 2 Current liabilities = 400000

 

Current liabilities = 200000

 

Working note

Current assets = Cash balance + Closing stock + Debtors

                            = 100000 + 100000 + 200000

                            = 400000

 

b)    Quick ratio = Quick assets / Current liabilities

                      = 300000 / 200000

                      = 1.5 : 1

Working note

Quick assets = Current assets – Closing stock

                       = 400000 – 100000

                       = 300000

c)     Inventory turnover ratio = Sales / Closing stock

= 450000 / 100000

= 4.5 times

 

e)     Debt-equity ratio = (Long term debts / Shareholder’s fund)*100

                                     = (89000 / 445000)*100

                                    = 20%

Working note

 

Long term debts = Debenture

                               = 89000

Shareholder’s fund = Share capital + P/L account

                                   = 400000 + 45000

                                   = 445000

2069 Set A Q. No. 15 

(a)             Quick ratio = (Quick assets) / (Current liabilities)

                        = 550000 / 300000

                         = 1.83:1

Working note

Current assets = Debtors + Bank balance

                           = 400000 + 150000

                           = 550000

Current liabilities = O/S expenses + Creditors

                                 = 50000 + 250000

                                 = 300000

(b)            Debtors turnover ratio = Net sales / Debtors

                                  = 1500000 / 400000

                                  = 3.75 times

(c)             Fixed assets turnover ratio = Net sales / Fixed assets

                                    = 1500000 / 700000

                                    = 2.14:1

(d)            Return on shareholder’s equity = (NPAT/Shareholder’s fund)*100

= (210000/1150000)*100

= 18.26%

 

Working note

Net profit before tax = 280000

(-) tax 70000

Net profit after tax 210000

 

Shareholder’s fund = Equity share capital + General reserve + Profit and loss account – Preliminary share

= 800000 + 100000 + 300000 – 50000

= 1150000

2069 Set B Q. No. 15

a)    Debtors turnover ratio = Net sales / Debtors

or, 10 = Sales amount / 50000

 

Sales amount = Rs. 500000

 

b)    Current ratio = (current assets)/(current liabilities)

                           = 120000 / 40000

                           = 3:1

Working note

Current assets = Closing stock + Debtors + Cash balance

= 40000 + 50000 + 30000

= 120000

 

Current liabilities = Creditors + expenses due

= 20000 + 20000

= 40000

 

c)     Quick ratio = (Quick assets) / (Current liabilities)

                        = 80000 / 40000

                         = 2:1

Working note

Quick assets = Current assets – closing stock

= 120000 – 40000

= 80000

 

d)    Debt-equity ratio = (Long term debts / Shareholder’s fund)*100

                                      = (125000 / 250000)*100

                                      = 50%

Working note

Long term debts = 10% debenture

= 125000

Shareholder’s fund = Share capital + Reserve and surplus – Preliminary expenses

= 200000 + 60000 – 10000

= 250000

 

(e)             Inventory turnover ratio = Sales / Closing stock
                                                  = 500000 / 40000

                                                    = 1.5:1

  2068 Q. No. 15

(a)             Inventory turnover ratio = Sales / Closing stock

                             = 1000000 / 200000

                             = 5 times

(b)            Current ratio = (current assets)/(current liabilities)

                            = 580000 / 200000

                              = 2.9 :1

 

Working note

Current assets = Inventory + Debtors + Bank balance

= 200000 + 300000 + 80000

= 580000

 

Current liabilities = Creditors + Provision for tax

= 170000 + 30000

= 200000

 

(c)             Net profit ratio = (Net profit / Sales) *100

= (250000 / 1000000)*100

= 25%

 

(d)            Return on shareholder’s equity = (NPAT  / share holder’s equity) *100

= (250000  / 980000)*100

= 25.51%

Working capital

 

SE = Equity share capital + 7% preference share capital + Profit and loss a/c – Preliminary expenses

= 500000 + 100000 + 400000 – 20000

= 980000

2068 Supp. Q. No. 15

a)    Current ratio = (current assets)/(current liabilities)

                           = 140000 / 70000

                           = 2:1

Working note

Current assets = Inventory + Cash in hand + Sundry debtors + Bills receivable

= 40000 + 20000 + 60000 + 20000

= 140000

 

Current liabilities = Sundry creditors

= 70000

 

b)    Quick ratio = (Quick assets) / (Current liabilities)

                         = 100000 / 70000

                         = 1.4286:1

Working note

Quick assets = Current assets – Inventory

= 140000 – 40000

= 100000

 

c)     Fixed assets turnover ratio = Sales / Net fixed assets

                                                  = 250000 / 125000

                                                     = 2 times

 

d)    Inventory turnover ratio = Sales / Inventory

                                          = 250000 / 40000

                                          = 6.25 times

e)     Gross profit ratio = (Gross profit / Sales) * 100

                                = (50000 / 250000)*100

                                = 20 %

 2067  Q. No. 15

(a)             Return on shareholder’s equity = (NPAT  / shareholder’s equity) *100

= (57000 / 520000) * 100

=10.96%

Working note

 

Shareholder’s equity = Share capital + General reserve – Preliminary expenses

= 500000 + 25000 – 5000

= 520000

 

(b)            Net profit margin = (Net profit / Net sales)*100

= (57000 / 270000)*100

= 21.11%

 

Working note

Net sales = Credit sales + Cash sales

= 70000 + 200000

= 270000

 

(c)             Current ratio = (current assets)/(current liabilities)

Or, 1.75 = 350000 / Current liabilities

Or, 1.75 Current liabilities = 350000

 

Current liabilities = 200000

2067 Supp. Q. No. 15 

a)    Current ratio = (current assets)/(current liabilities)

= 180000 / 70000

= 2.57:1

Working note

Current assets = Debtors + Inventory + Pre-paid expenses + Cash

= 40000 + 100000 + 10000 + 30000

= 180000

Current liabilities = Creditors + Outstanding expenses + Bills payable

= 30000 + 10000 + 30000

= 70000

b)    Quick ratio = (Quick assets) / (Current liabilities)

                          = 70000 / 70000

                          = 1:1

Working note

Liquid assets = Current assets – Inventory – Closing stock

= 180000 – 100000 – 10000

= 70000

c)     Debt – equity ratio = (Long term debts / Share-holder’s fund) *100

= (100000 / 260000)*100

= 38.46 %

Working note

Share – holder’s fund = Equity share + General reserve + Retaining earning – Preliminary expenses

= 200000 + 50000 + 20000 – 10000

= 260000

d)    Stock turnover ratio = Sales / Inventory

= 400000 / 100000

= 4 times

e)     Earnings per share = (NPAT – Pref. dividend) / No. of equity share

= (40000 – 0) / 2000

= Rs. 20

2066 (C) Q. No. 15

a)    Current ratio = Current assets / Current liabilities

Or, 2 = 320000 / Current liabilities

Or, 2 Current liabilities = 320000

Current liabilities = 160000

Working capital

 

Current assets = Closing inventory + Sundry debtors + Cash – in – hand

= 140000 + 100000 + 80000

= 320000

b)    Quick ratio = Quick assets / current liabilities

180000 / 160000

1.125:1

=