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Question
Capital Employed ₹8,00,000; Shareholders' Funds ₹2,00,000. Calculate Debt to Equity Ratio.
Solution
Shareholders’ Funds = 2,00,000
Capital Employed = 8,00,000
Long- Term Debts = Capital Employed − Shareholders’ Funds
= 8,00,000 − 2,00,000 = 6,00,000
`"Debt - Equity Ratio" = "Long-term Debts"/"Equity" = 600000/200000 = 3:1`
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RELATED QUESTIONS
Following is the Balance Sheet of Title Machine Ltd. as at March 31, 2017.
| Particulars |
Amount Rs. |
| I. Equity and Liabilities | |
|
1. Shareholders’ funds |
|
|
a) Share capital |
24,00,000 |
|
b) Reserves and surplus |
6,00,000 |
|
2. Non-current liabilities |
|
|
a) Long-term borrowings |
9,00,000 |
|
3. Current liabilities |
|
|
a) Short-term borrowings |
6,00,000 |
|
b) Trade payables |
23,40,000 |
|
c) Short-term provisions |
60,000 |
| Total | 69,00,000 |
| II. Assets | |
|
1. Non-current Assets |
|
|
a) Fixed assets |
|
|
Tangible assets |
45,00,000 |
|
2. Current Assets |
|
|
a) Inventories |
12,00,000 |
|
b) Trade receivables |
9,00,000 |
|
c) Cash and cash equivalents |
2,28,000 |
|
d) Short-term loans and advances |
72,000 |
| Total | 69,00,000 |
Calculate Current Ratio and Liquid Ratio.
From the following compute Current Ratio:
| ₹ | ₹ | |||
| Trade Receivable (Sundry Debtors) | 1,80,000 | Bills Payable | 20,000 | |
| Prepaid Expenses | 40,000 | Sundry Creditors | 1,00,000 | |
| Cash and Cash Equivalents | 50,000 | Debentures | 4,00,000 | |
| Marketable Securities | 50,000 | Inventories | 80,000 | |
| Land and Building | 5,00,000 | Expenses Payable | 80,000 |
Trade Payables ₹ 50,000, Working Capital ₹ 9,00,000, Current Liabilities ₹ 3,00,000. Calculate Current Ratio.
Ratio of Current Assets (₹8,75,000) to Current Liabilities (₹3,50,000) is 2.5:1 The firm wants to maintain Current Ratio of 2:1 by purchasing goods on credit. Compute amount of goods that should be purchased on credit.
Total Assets ₹22,00,000; Fixed Assets ₹10,00,000; Capital Employed ₹20,00,000. There were no Long-term Investments.
Calculate Current Ratio.
Following is the Balance Sheet of Crescent Chemical Works Limited as at 31st March, 2019:
|
Particulars |
Note |
₹ |
| I. EQUITY AND LIABILITIES : 1. Shareholder's Funds : |
||
|
(a) Share Capital |
|
70,000 |
|
(b) Reserves and Surplus |
|
35,000 |
| 2. Non-Current Liabilities : | ||
|
Long-term Borrowings |
|
25,000 |
| 3. Current Liabilities : | ||
|
(a) Short-term Borrowings |
|
3,000 |
|
(b) Trade Payables (Creditors) |
|
13,000 |
|
(b) Short-term Provisions: Provision for Tax |
|
4,000 |
|
Total |
|
1,50,000 |
| II. ASSETS : | ||
|
1. Non-Current Assets |
||
|
(a) Fixed Assets (Tangible) |
|
45,000 |
|
(b) Non-current Investments |
|
5,000 |
|
2. Current Assets |
||
|
(a) Inventories (Stock) |
|
50,000 |
|
(b) Trade Receivables (Debtors) |
|
30,000 |
|
(c) Cash and Cash Equivalents |
|
20,000 |
|
Total |
|
1,50,000 |
Compute Current Ratio and Liquid Ratio
From the following calculate: (i) Current Ratio; and (ii) Quick Ratio:
| ₹ | ₹ | ||
| Total Debt | 6,00,000 | Long-term Borrowings | 2,00,000 |
| Total Assets | 8,00,000 | Long-term Provisions | 2,00,000 |
| Fixed Assests (Tangible) | 3,00,000 | Inventories | 95,000 |
| Non-current Investment | 50,000 | Prepaid Expenses | 5,000 |
| Long-term Loans and Advances | 50,000 |
Total Assets ₹ 2,60,000; Total Debts ₹ 1,80,000; Current Liabilities ₹ 20,000. Calculate Debt to Equity Ratio.
Calculate Trade Receivables Turnover Ratio from the following information:
| 31st March,2018 (₹) | 31st March,2019 (₹) | |
| Sundry Debtors | 28,000 | 25,000 |
| Bills Receivable | 7,000 | 15,000 |
| Provision for Doubtful Debts | 2,800 | 2,500 |
Total Sales ₹ 1,00,000; Sales Return ₹ 1,500; Cash Sales ₹ 23,500.
Calculate Trade Payables Turnover Ratio for the year 2018-19 in each of the alternative cases:
Case 1 : Closing Trade Payables ₹ 45,000; Net Purchases ₹ 3,60,000; Purchases Return ₹ 60,000; Cash Purchases ₹ 90,000.
Case 2 : Opening Trade Payables ₹ 15,000; Closing Trade Payables ₹ 45,000; Net Purchases ₹ 3,60,000.
Case 3 : Closing Trade Payables ₹ 45,000; Net Purchases ₹ 3,60,000.
Case 4 : Closing Trade Payables (including ₹ 25,000 due to a supplier of machinery) ₹ 55,000; Net Credit Purchases ₹ 3,60,000.
Calculate Gross Profit Ratio from the following data:
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Net Profit before Interest and Tax ₹2,50,000; Capital Employed ₹10,00,000. Calculate Return on Investment.
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| Particulars | ₹ |
| Revenue From Operations | 12,00,000 |
| Cost of Revenue from Operations | 9,00,000 |
| Operating Expenses | 15,000 |
| Inventory | 20,000 |
| Other Current Assets | 2,00,000 |
| Current Liabilities | 75,000 |
| aid up Share Capital | 4,00,000 |
| Statement of Profit and Loss (Dr.) | 47,500 |
| Total Debt | 2,50,000 |
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