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12th Standard Accountancy English Medium - Ratio Analysis 5 Mark Creative Question Paper and Answer Key 2022 - 2023

Published on: 02/09/2022

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Questions:

Generic 5

11 x 5 = 55

From the following trading activities of Naveen Ltd, calculate:
i. Gross Profit Ratio
ii. Operating Cost Ratio
iii. Operating Profit Ratio

From the following. you are required to calculate liquidity ratio.

Particulars	Amt(Rs.)	Particulars	Amt(Rs.)
Debtors	5,000	Creditors	4,000
Cash in hand	4,000	Bills Payable	3,000
Cash at bank	6,000	Outstanding exp	250
Short term Investment	2,000	Bills Receivable	3,000
Prepaid expens	1,000	Closing Stock	8,000

From the following information calculate current ratio and liquid ratio.

Particulars	Amt(Rs.)	Particulars	Amt(Rs.)
Cash	5,000	Debtors	29,000
Bills Receivable	5,000	Short term Investment	15,000
Stock	5.2,000	Prepaid expense	2,000
Creditors	36,000	Bills Payable	10,000
Outstanding exp	8,000

From the following figures obtained from Sun Ltd; calculate the trade payables turnover ratio and credit payment period (in days).

Particulars	Rs.
Credit purchases during 2018 - 2019	1,00,000
Trade creditors as on 1.4.2018	20,000
Trade creditors as on 31.3.2019	10,000
Bills payable as on 1.4.2018	4,000
Bills payable as on 31.3.2019	6,000

From the following Balance Sheet of Ambika Ltd. as on 31.03.2017 calculate
(i) Debt-equity ratio
(ii) Proprietary ratio
(iii) Capital gearing ratio

Balance sheet of Ambika Ltd. as on 31.3.2017
Particulars	Amount Rs.
I. EQUITY AND LIABILITIES
1. Shareholders' funds
(a) Share capital
Equity share capital	3,00,000
8% Preference share capital	4,00,000
(b) Reserves and surplus	3,00,000
2. Non-current liabilities
Long term borrowings (9% Debentures)	8,00,000
3. Current liabilities
Short -term borrowings from banks	50,000
Trade payables	1,50,000
Total	20,00,000
II. ASSETS
1. Non-current assets
Fixed assets	15,00,000
2. Current assets
(a) Inventories	2,40,000
(b) Trade receivables	2,00,000
(c) Cash and cash equivalents	55,000
(d) Other current assets
Expenses paid in advance	5,000
Total	20,00,000

From the following Balance Sheet of Luckman Ltd. calculate proprietary ratio:

Balance sheet of Luckman Ltd. as on 31.3.2018
Particulars	Rs.
I. EQUITY AND LIABILITIES
1. Shareholders' funds
(a) Share capital
(i) Equity share capital	1,00,000
(ii) Preference share capital	75,000
(b) Reserves and surplus	25,000
2. Non-current liabilities
Long term borrowings	-
3. Current liabilities
Trade payables	2,00,000
Total	4,00,000
II. ASSETS
1. Non-current assets
(a) Fixed assets	2,75,000
(b) Non -current investments	50,000
2. Current assets
Cash and cash equivalents	75,000
Total	4,00,000

Calculate quick ratio of Babu construction Ltd., from, the information given below

Particulars	Rs.
Total current liabilities	2,00,000
Total current assets	4,00,000
Inventories	70,000
Prepaid expenses	30,000

Calculate (i) Inventory turnover ratio (ii) Trade receivables turnover ratio (iii) Trade payables turnover ratio and (iv) Fixed assets turnover ratio from the following information obtained from Dolphin Ltd.

Particulars	As on 31^st March 2017 Rs.	As on 31^st March 2018 Rs.
Inventory	70,000	50,000
Trade receivables	40,000	30,000
Trade payables	20,000	25,000
Fixed assets	2,75,000	2,50,000

Additional information:
(i) Revenue from operations for the year Rs.5,25,000
(ii) Purchases for the year Rs.2,25,000
(iii) Cost of revenue from operations Rs.3,00,000
Assume that sales and purchases are for credit

From the following trading activities of Jamal Ltd. calculate
(i) Gross profit ratio
(ii) Net profit ratio
(iii) Operating cost ratio
(iv) Operating profit ratio

Statement of Profit and Loss
Particulars	Rs.
I. Revenue from operations	10,000
II. Other Income
Income from investments	100
III. Total revenue (I +II)	10,100
IV. Expenses:
Purchases of Stock-in -trade	8,500
Changes in inventories	-500
Finance costs	150
Other expenses (Administration and selling)	1,200
Total expenses	7,850
V. Profit before tax (III - IV)	800

10.

Following is the extract of the balance sheet of Hindustan Products Ltd., as on 31^st March 2019.

Particulars	Rs.
I. EQUITY AND LIABILITIES
1. Shareholders' funds
(a) Share capital	2,90,000
(b) Reserves and surplus	60,000
2. Non-current liabilities
Long term borrowings	40,000
3. Current liabilities
(a) Trade payables	1,15,000
(b) Other current liabilities	15,000
Total	5,20,000

11.

Calculate the current ratio from the following information.

Particulars	Rs.	Particulars	Rs.
Current investments	15,000	Trade creditors	36,000
Inventories	29,000	Bills payable	10,000
Cash and cash equivalents	5,000	Expenses payable	8,000
Trade receivables	5,000

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Answers Key:

Generic 5

11 x 5 = 55

Particulars	Rs.
I. Revenue from operation	20,000
II.Other income
Income from investment	200
III.Totalrevenues (I+ II)	20,200
IV.Expenses
Purchase of stock-in-trade	17,000
Changes in inventories	(-) 1,000
Finance costs	300
Other. expenses ( administration and selling)	2,400
Total expenses	18,700
V. Profit before tax (III - IV)	1,500

(i) Gross profit ratio:
\(\text { Gross profit ratio }=\frac{\text { Gross protit }}{\text { Revenue from operations }} \times 100\)
= \(\frac{4,000}{20,000} \times 100\)
= 20%
Cost of revenue from operations = Purchase of stock in trade + Changes in inventory +Direct expenses
= 17,000 - 1,000 + 0 = Rs.16,000
Gross profit= Revenue from operation - Cost of revenue from operations
= 20,000 - 16,000 = Rs.4,000

(ii) Operating cost ratio:
\(\text { Operating cost ratio }=\frac{\text { Operating cost }}{\text { Revenue from operations }} \times 100\)
= \(\frac{18,400}{20,000} \times 100\)
= 92%
(iii) Operating cost ratio :

\(\text { Operating cost ratio }=\frac{\text { Operating cost }}{\text { Revenue from operations }} \times 100\)
= \(\frac{18,400}{20,000} \times 100\)
= 92%
Operating Cost = Cost of revenue from operations + Operating expenses
Operating expenses = Other expenses = Rs.2,400
Operating cost = 16,000 + 2,400 = Rs. 18,400
(iii) Operating profit ratio:
\(\text { Operating profit ratio }=\frac{\text { Operating profit }}{\text { Revenue from operations }} \times 100\)
= \(\frac{1,600}{20,000} \times 100\)
Operating profit = Revenue from operations - Operating cost
= 20,000 - 18,400 = Rs.1,600

(a) \(\text { Current Ratio }=\frac{\text { Current assets }}{\text { Current liabilities }}\)
Current Assets = Debtors + Cash + Bank + Short term investments + Prepaid exp + Bills receivable + Stock
= 5,000 + 4,000 + 6,000 + 2,000 + 1,000 + 3,000 + 8,000 = Rs. 29,000
Current Liabilities = Creditors + Bills Payable + O/s exp
= 4,000 + 3,000 + 250
= 7,250
\(\text { Current Ratio }=\frac{29,000}{7,250}=4: 1\)
\(\text { (b) Liquid Ratio }=\frac{\text { Liquid Assets }}{\text { Current Liabilities }}\)
Liquid Assets = Current Assets - (Stock+ Prepaid Exp)
= 29,000 - (8,000 + 1,000)
= 29,000 - 9,000 = Rs.20,000
\(\text { Liquid Ratio } \quad=\frac{20,000}{7,250}=2.76: 1\)
(c) \(\text { Absolute Liquid Ratio }=\frac{\text { Absolute Liquid Assets }}{\text { Liquid Liabilities }}\)
\(\left.\begin{array}{l} \text { Absolute Liquid } \\ \text { Assets } \end{array}\right\}=\text { Cash }+\text { Bank }+\text { Short Term Investment }\)
= Rs.4,000 + 6,000 + 2,000 = Rs.12,000

\(\text { (a) Current Ratio }=\frac{\text { Current assets }}{\text { Current liabilities }}\)
Current Assets = Cash + Debtors + Bills Receivable + Short Term Investment + Stock + Prepaid Expenses
= Rs.5,000 + 29,000 + 5,000 + 15,000 + 52,000 + 2,000
= Rs.1,08,000
Current Liabilities = Creditors + Bill Payable + Outstanding expenses
= Rs.36,000 + 10,000 + 8,000
= Rs.54,000
Current Ratio = \(\frac{1,08,000}{54,000}=2: 1\)
(b) \(\text { Liquid Ratio }=\frac{\text { Liquid Assets }}{\text { Current Liabilities }}\)
Liquid Assets = Current Assets - (Stock + Prepaid Expenses)
= 1,08,000 - (52,000 + 2,000)
= 1,08,000 - 54,000
= 54,000
\(\text { Liquid Ratio }=\frac{54,000}{54,000}=1: 1\)
Current ratio : 2 : 1 ; Liquid ratio : 1 : 1

Trade payables turnover ratio = \(\frac { Net\quad credit\quad purchases }{ Average\quad trade\quad payables } \)
Average trade payables = \(\frac { Opening\quad trade\quad payables+Closing\quad trade\quad payables }{ 2 } \)
= \(\frac { (20,000+4,000)+(10,000+6,000) }{ 2 } \)
= \(\frac { 40,000 }{ 2 } \) = Rs.20,000
Average payment period (in days) = \(\frac { Number\quad of\quad days\quad in\quad a\quad year }{ Trade\quad payables\quad turn\quad over\quad ratio } \)
=\(\frac { 365 }{ 5 } \) = 70 days
∴ Trade payables turnover ratio (in days) = \(\frac { 1,00,000 }{ 20,000 } \) = 5 times.

(i) Debt equity ratio = \(\frac { Long\quad term\quad debt }{ Shareholders\quad funds } \)
Long term debt = 9% Debentures = Rs.8,00,000
Shareholder's funds =Equity share capital + Preference share capital + Reserves and surplus
= 3,00,000 + 4,00,000 + 3,00,000 = Rs.10,00,000
∴ Debt equity ratio = \(\frac { 8,00,000 }{ 10,00,000 } \)= 0.8:1
(ii) Proprietary ratio = \(\frac { Shareholder's\quad funds }{ Total\quad assets } \)
= \(\frac { 10,00,000 }{ 20,00,000 } \)= 0.5:1
(iii) Capital gearing ratio = \(\frac { Funds\quad bearing\quad fixed\quad interest\quad or\quad fixed\quad dividend }{ Equity\quad Shareholder's\quad funds } \)
Funds bearing fixed interest or fixed dividend = 8% Preference capital + 9% Debentures
= Rs.4,00,000+8,00,000
= Rs.12,00,000
Equity shareholder's funds = Equity share capital + Reserve and Surplus
= 3,00,000 + 5,00,000
= Rs.6,00,000
∴ Capital gearing ratio = \(\frac { 12,00,000 }{ 6,00,000 } \).

Proprietary ratio = \(\frac { Shareholder's\quad funds }{ Total\quad assets } \)
Shareholder's funds = Equity share capital + Preference share capital + Reserves and surplus
= Rs.1,00,000 + Rs.75,000 + Rs.25,000 = Rs.2,00,000
∴ Proprietary ratio = \(\frac { 2,00,000 }{ 4,00,000 } \) = 0.5:1

Quick ratio = \(\frac { Quick\quad assets }{ Current\quad liabilities } \)
Quick assets = Current assets - Inventories - Prepaid expenses
= Rs.4,00,000 + Rs.70,000 - Rs.30,000 = Rs.3,00,000
∴ Quick ratio = \(\frac { 3,00,000 }{ 2,00,000 } \) = 1.5:1

(i) Inventory turnover ratio = \(\frac { Cost\quad of\quad revenue\quad from\quad operations }{ Average\quad inventory } \)
Average inventory = \(\frac { Opening\quad inventory+Closing\quad inventory }{ 2 } \)
=\(\frac { 70,000+50,000 }{ 2 } \) = 60,000
∴ Inventory turnover ratio =\(\frac { 3,00,000 }{ 60,000 } \) = 5 times.
(ii) Trade receivables turnover ratio = \(\frac { Credit\quad revenue\quad from\quad operations }{ Average\quad trade\quad receivables } \)
Average trade receivables = \(\frac { Opening\quad trade\quad receivables+Closing\quad trade\quad receivables }{ 2 } \)
= \(\frac { 40,000+30,000 }{ 2 } \) = 35,000
∴ Trade receivables turnover ratio = \(\frac { 5,25,000 }{ 35,000 } \) = 15 times
(iii) Trade payables turnover ratio = \(\frac { Net\quad credit\quad purchases }{ Average\quad trade\quad payables } \)
Average trade payables = \(\frac { Opening\quad trade\quad payables+Closing\quad trade\quad payables }{ 2 } \)
= \(\frac { 20,000+25,000 }{ 2 } =\frac { 45,000 }{ 2 } \)
= Rs.22,500
∴ Trade payables turnover ratio =\(\frac { 2,25,000 }{ 22,500 } \) = 10 times.
(iv) Fixed assets turnover ratio = \(\frac { Revenue\quad from\quad operations }{ Average\quad fixed\quad assets } \)
Average fixed assets = \(\frac { Opening\quad fixed\quad assets+Closing\quad fixed\quad assets }{ 2 } \)
= \(\frac { 2,75,000+2,50,000 }{ 2 } =\frac { 4,75,000 }{ 2 } \)
= Rs.2,62,500
∴ Fixed assets turnover ratio = \(\frac { 5,25,000 }{ 2,62,500 } \) = 2 times

(i) Gross profit ratio =\(\frac { Gross\quad profit }{ Revenue\quad from\quad operations } \) \(\times\) 100
Cost of revenue from operations = Purchases of stock-in-trade + Change in inventory + Direct expenses
= 8,500 - 500 + 0 = Rs.8,000
Gross profit = Revenue from operations - Cost of revenue from operations
= 10,000 - 8,000 = Rs.2,000
∴ Gross profit ratio =\(\frac { 2,000 }{ 8,000 } \) \(\times\) 100 = 25%
(ii) Net profit ratio =\(\frac { Net\quad profit\quad after\quad tax }{ Revenue\quad from\quad operations } \) \(\times\) 100
=\(\frac { 800 }{ 10,000 } \) \(\times\) 100 = 8%
(iii) Operating cost ratio =\(\\ \frac { Operating\quad cost }{ Revenue\quad from\quad operations } \) \(\times\) 100
Operating cost = Cost of revenue from operations + Operating expenses
Operating expenses Other expenses = Rs.1,200
Operating cost = 8,000 + 1,200 = Rs.9,200
∴ Operating cost ratio =\(\frac { 9,200 }{ 10,000 } \) \(\times\) 100 = 92%
(iv) Operating profit ratio = \(\frac { Operating\quad profit }{ Revenue\quad from\quad operations } \) \(\times\) 100
Operating profit = Revenue from operations - Operating Cost
= 10,000 - 9,200 = Rs.800
∴ Operating profit ratio = \(\frac { 800 }{ 10,000 } \) \(\times\) 100 = 8%

10.

Return on Investment (ROI) = \(\frac { Net\quad profit\quad before\quad interest\quad and\quad tax }{ Capital\quad employed } \)
Capital employed = Share capital + Reserves and surplus + Long term borrowings
= 2,90,000 + 60,000 + 50,000 = Rs.3,90,000
∴ Return on Investment = \(\frac { 50,000 }{ 4,00,000 } \) x 100 = 12.5%

11.

Current ratio = \(\frac { Current\ assets }{ Current\ liabilities } \)
Current assets Current investments + Inventories + Trade receivables + Cash and cash equivalents + Prepaid expenses
= 15,000 + 29,000 + 5,000 + 5,000 + 0
= Rs.54,000
Current liabilities = Trade creditors + Bills payable + Expenses payable
= 36,000 + 10,000 + 8,000 = Rs.54,000
∴ Current assets = \(\frac { 54,000 }{ 54,000 } \) = 1 : 1