Ratio analysis | part 2 | Solution of old is gold
Ratio analysis Part 2 | Solution of old is gold
(2071 Supp.- 2066 supp.)
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
(e) Inventory turnover ratio = Sales / Closing stocka) 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
= 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
