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Test Series – 1 (Accounting Ratios)

Time Allowed – 1.30 Hour Max. Marks – 58

Q-1) Calculate debt equity ratio from the following information:

Total Assets 15,00,000
Current Liabilities 6,00,000
Total Debt 12,00,000
(3)
Q-2) From the following, calculate
(A) Debt Equity Ratio (B) Total Assets to Debt Ratio (C) Proprietary Ratio
Equity Share Capital 75,000
Preference Share Capital 25,000
General Reserve 45,000
Accumulated Profits 30,000
Debentures 75,000
Sundry Creditors 40,000
Outstanding Expenses 10,000
(6)
Q-3) You are able to collect the following information about a company for two years:
2015-16 (Rs.) 2016-17 (Rs.)
Book Debts on April 1 4,00,000 5,00,000
Book Debts on March 31 ----- 5,60,000
Stock in trade on March 31 6,00,000 9,00,000
Revenue from Operations (at gross profit of 25%) 30,00,000 24,00,000

Calculate Inventory Turnover Ratio and Trade Receivables Turnover Ratio if in the year 2015-16 stock in trade
increased by Rs.2,00,000. (4)

Q-4) Calculate gross profit ratio from the following information available for the year 2016-17:
Rs.
Revenue from Operation: Cash 25,000
: Credit 75,000
Purchases: Cash 15,000
: Credit 60,000
Carriage Inwards 2,000
Salaries 25,000
Increase in Inventory 10,000
Return Outwards 2,000
Wages 5,000
(3)
Q-5) From the following detail, calculate Return on Investment:
Share Capital: Equity (Rs.10) Rs.4,00,000 Current Liabilities: Rs.1,00,000
12% Preference Rs.1,00,000 Fixed Assets Rs.9,50,000
Reserve & Surplus Rs.1,84,000 Current Assets Rs.2,34,000
10% Debentures Rs.4,00,000
Net profit after Preference Dividend was Rs.1,38,000 and the tax rate was 25%. (4)

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Q-6) Read the following extract of Rehan Ltd. and answer the following questions on the basis of the same.
Revenue from Operations 3,00,000
Cost of Revenue from Operations 2,40,000
Inventory at the end 62,000
Gross profit 60,000
Inventory in the beginning 58,000
Trade Receivables 32,000
(A) Gross profit ratio for the year will be
(a) 30% (b) 40% (c) 75% (d) 20%
(B) Inventory Turnover Ratio for the year will be
(a) 6 Times (b) 7 Times
(c) 4 Times (d) 5 Times
(C) Trade Receivables Turnover Ratio for the year will be
(a) 5.6 times (b) 7.5 times
(c) 9 times (d) 9.4 times
(D) Gross Profit Ratio and Net Profit Ratio are which type of ratios? (4)

Q-7) Calculate Debt to Capital employed ratio.

Share Capital Rs.5,00,000
Reserve and Surplus Rs.1,00,000
Long Term Borrowings Rs.1,60,000
Long Term Provisions Rs.40,000
Current Liabilities Rs.50,000
Non-Current Assets Rs.5,20,000
Current Assets Rs.3,30,000
(3)
Q-8) Calculate Fixed Assets Turnover Ratio
Provision for Depreciation Rs.1,20,000
Plant & Machinery Rs.7,80,000
Goodwill Rs.40,000
Average Inventory Rs.6,20,000
Inventory Turnover Ratio 5 times
Gross Profit 20% on cost
(4)
Q-9) Read the following passages and answer the question that follows:
Total Debt 12,00,000
Total Assets 16,00,000
Fixed Assets 6,00,000
Non-current investment 1,00,000
Long term Loans and Advances 1,00,000
Long term Borrowings 4,00,000
Long term Provisions 4,00,000
Inventories 1,90,000
Prepaid Expenses 10,000
(A) From the above information calculate current ratio
(a) 2:1 (b) 1.8:1 (c) 2.32:1 (d) 2.4:1
(B) Quick ratio will be …………
(a) 1.75:1 (b) 1.8:1 (c) 1.5:1 (d) 1.25:1
(C) What is the amount of current liabilities?
(a) Rs.5,00,000 (b) Rs.1,00,000 (c) Rs.2,00,000 (d) Rs.4,00,000
(D) What is the amount of current assets to calculate current ratio?
(a) Rs.8,00,000 (b) Rs.9,00,000 (c) Rs.7,50,000 (d) Rs.7,00,000 (4)
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Q-10) Assuming that debt to equity ratio is 2:1 state giving reasons whether this ratio will increase or decrease or
will have no change in each case.
(A) Redemption of debentures for each
(B) Conversion of debentures into equity shares
(C) Fully paid-up Bonus Shares issued
(3)
Q-11)
Fixed Assets 6,00,000
Accumulated Depreciation 1,00,000
Non-current investment 30,000
Long-term Loans and Advances 20,000
Current Assets 2,50,000
Current Liabilities 2,00,000
Long term Borrowings (10% Debentures) 3,00,000
Long-term Provision 1,00,000
(A) What will be the amount of non-current assets to calculate equity?
(a) Rs.5,00,000 (b) Rs.5,50,000 (c) Rs.6,00,000 (d) Rs.7,00,000
(B) What will be the amount of non-current liabilities?
(a) Rs.4,00,000 (b) Rs.5,00,000 (c) Rs.5,50,000 (d) Rs.4,50,000
(C) From the above information equity will be
(a) Rs.1,00,000 (b) Rs.5,00,000 (c) Rs.4,50,000 (d) Rs.2,00,000
(D) Debt equity ratio will be
(a) 1:1 (b) 4:5 (c) 2:1 (d) 3:2 (4)

Q-12) Determine Return on Investment and Working Capital Turnover ratio from the following information:
Profit after Tax were Rs.6,00,000; Tax rate was 40%; 15% Debentures were of Rs.20,00,000; 10% Bank Loan was
Rs.20,00,000; 12% Preference Share Capital Rs.30,00,000; Equity Share Capital Rs.40,00,000; Reserves and Surplus
were Rs.10,00,000; Non-current Assets Rs.1,00,00,000; Sales Rs.3,75,00,000 and Sales return Rs.15,00,000.
(4)
Q-13) Vodafone ltd. has a loan of ₹15,00,000 as a part of its capital employed. The interest rate on loan is 15% and
Return on Investment is 25%. Income tax rate is 40%. Calculate gain to Shareholders due to loan raised. (3)

Q-14) From the following data, compute Quick Ratio.

Working Capital ₹ 2,50,000
Total Debts ₹ 4,00,000
Long term Debt ₹ 2,20,000
Inventory ₹ 2,00,000
Prepaid Expenses ₹ 20,000
(3)
Q-15) Revenue from operations (Net sales) ₹5,00,000, opening inventory ₹7,000, closing inventory ₹ 4,000 more than
the opening inventory, net purchase₹ 1,00,000 less than revenue from operations, operating expenses ₹ 30,000, Tax
Rs.17,000, liquid assets₹ 75,000, prepaid expenses ₹ 2,000, current liabilities ₹60,000, 9% debentures ₹ 3,00,000, long-
term loan from bank ₹ 1,00,000, equity share capital ₹ 10,00,000 and 8% preference share capital ₹2,00,000.
From the following information, calculate any two of the following ratios:
(A) Current Ratio (B) Inventory Turnover Ratio (C) Debt Equity Ratio
(6)

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