Chap – Accounting Ratio

2010:
Q1. (a) A business has a current ratio of 3: 1 and quick ratio of 1.2:1.
If the working capital is Rs. 1,80,000/-, calculate the total Current
Assets and value of Stock. (2)
(b) From the given information calculate the Stock turnover ratio.
Sales Rs. 2,00,000; GP: 25% on cost; Stock at the beginning is 1/3
of the stock at the end which was 30% of sales. (2)

2011:
Q2. Assuming that the Debt-Equity ratio is 2. State giving reasons
whether this ratio would increase, decrease or remain unchanged in
the following cases: (ANY FOUR) (4)
(a) Purchase of fixed asset on a credit of 2 months.
(b) Purchase of fixed asset on a long term deferred payment basis.
(c) Issue of New shares for cash.
(d) Issue of Bonus shares.
(e) Sale of fixed asset at a loss of Rs. 3,000.
Q3. On the basis of the following information calculate: (4)
(i) Debt-Equity Ratio and
(ii) Working Capita; Turnover Ratio
Information Rs.
Net sales 60,00,000
Cost of goods sold 45,00,000
Other current assets 11,00,000
Current Liabilities 4,00,000
Paid up share capital 6,00,000
6% Debentures 3,00,000
9% Loan 1,00,000
Debentures Redemption 2,00,000
Reserve
1,00,000
Closing Stock

2012:
Q4. O.M. Ltd has a Current Ratio of 3.5 : 1 and Quick Ratio of 2 : 1. If
the excess of Current Assets over Quick Assets as represented by
stock is Rs. 1,50,000, calculate Current Assets and Current
Liabilities. (3)
Q5. From the following information, calculate any two of the
following ratios: (4)
(a) Debt-Equity Ratio
(b) Working Capital Turnover Ratio and
(c) Return of Investment
Information: Equity share Capital Rs. 50,000, General Reserve Rs.
5,000; Profit and Loss Account after tax and interest Rs. 15,000; 9%
Debentures Rs. 20,000; creditors Rs. 15,000; Land and Building Rs.
65,000; Equipment Rs. 15,000; Debtors Rs. 14,500 and Cash Rs.
5,500. Discount on issue of shares Rs. 5,000.
Sales for the year ended 31.3.2011 was Rs. 1,50,000. Tax rate 50%.

2013:
Q6. (a) Compute ‘Working Capital turnover Ratio’ from the following
information:
Cash Sales Rs. 1,30,000; Credit Sales Rs.3,80,000; Sales Returns
Rs. 10,000; Liquid Assets Rs. 1,40,000; Current Liabilities
Rs.1,05,000 and inventory Rs. 90,000.
(b) Total Assets Rs. 3,50,000; Total Debts Rs. 2,50,000 and Current
Liabilities Rs. 80,000.

2014:
Q7. (a) The quick ratio of a company is 1.5 : 1. State with reason
which of the following transactions would (i) increase; (ii) decrease
or (iii) not change the ratio : (4)
(1) Paid rent Rs. 3,000 in advance.
(2) Trade receivables included a debtor Shri Ashok who paid his
entire amount due Rs. 9,700.
(b) From the following information compute ‘Proprietary Ratio’:
Rs.
Long Term Borrowings 2,00,000
Long Term Provisions 1,00,000
Current Liabilities 50,000
Non-Current Assets 3,60,000
Current Assets 90,000

2015:
Q8. The Current Ratio of a company is 2.1 : 1.2. State with reasons
which of the following transactions will increase, decrease or not
change the ratio :
(i) Redeemed 9% debentures of Rs 1,00,000 at a premium of 10%.
(ii) Received from debtors Rs 17,000.
(iii) Issued Rs 2,00,000 equity shares to the vendors of machinery.
(iv) Accepted bills of exchange drawn by the creditors Rs 7,000.

2016:
Q9. (a) What is meant by 'Activity Ratios'?
(b) From the following information calculate inventory turnover
ratio; Revenue from operations Rs 16,00,000; Average Inventory Rs
2,20,000; Gross Loss Ratio 5%.

2017:
Q10. The proprietary ratio of M. Ltd. is 0.80 : 1.
State with reasons whether the following transactions will increase,
decrease or not change the proprietary ratio:
(i) Obtained a loan from bank Rs 2,00,000 payable after five years.
(ii) Purchased machinery for cash Rs 75,000.
(iii) Redeemed 5% redeemable preference shares Rs 1,00,000.
(iv) Issued equity shares to the vendors of machinery purchased for
Rs 4,00,000.

2018:
Q11. From the following information obtained from the books of
Kundan Ltd., calculate the inventory turnover ratio for the years
2015 - 16 and 2016 - 17 : (4)
2015-16 ₹ 2016-17 ₹
Inventory on 31st March 7,00,000 17,00,000
Revenue from operations 50,00,000 75,00,000
(Gross profit is 25% on cost of revenue from operations)
In the year 2015 − 16, inventory increased by ₹ 2,00,000.

2019:
Q12. Calculate Revenue from operations of BN Ltd. From the
following information : (3+1=4)
Current assets Rs.8,00,000.
Quick ratio is 1.5 : 1
Current ratio is 2:1
Inventory turnover ratio is 6 times.
a. Goods were sold at a profit of 25% on cost.
b.The Operating ratio of a company is 60%. State whether
‘Purchase of goods costing Rs.20,000’ will increase, decrease
or not change the operating ratio.
OR
a. Calculate ‘Total Assets to Debt ratio’ from the following
information :
Rs.
Equity Share Capital 4,00,000
Long Term Borrowings 1,80,000
 Surplus i.e. Balance in statement of Profit and
1,00,000
Loss
General Reserve 70,000
Current Liabilities 30,000
Long Term Provisions 1,20,000
b.The Debt Equity ratio of a company is 1 : 2. State whether 'Issue
of bonus shares' will increase, decrease or not change the Debt
Equity Ratio.

2020:
Q13. What will be the effect of purchase of goods for cash ₹3,000 on
Gross Profit Ratio?
Q14. From the following information obtained from the books of P.
Ltd., calculate, (i) Return on Investment, and (ii) Debt-Equity Ratio :
Information:
Net Profit after interest and tax ₹6,00,000; 6% Debentures
₹10,00,000; Capital employed ₹20,00,000, and Tax rate 40%.

OR
i. Current Liabilities ₹1,50,000, Current Assets ₹2,80,000,
Inventories ₹40,000, Advance Tax ₹30,000, and Prepaid Rent
₹10,000.
Calculate Quick Ratio.
ii. Average Inventory ₹60,000, Revenue from Operations ₹6,00,000,
the rate of Gross Loss on Sales is 10%. Calculate the Inventory
Turnover Ratio.