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Question
From the following, calculate (a) Debt to Equity Ratio; (b) Total Assets to Debt Ratio; and (c) Proprietary Ratio:
| Equity Share Capital | ₹ 75,000 | Debentures | ₹ 75,000 | |
| Preference Share Capital | ₹ 25,000 | Trade Payable | ₹ 40,000 | |
| General Reserve | ₹ 45,000 | Outstanding Expenses | ₹ 10,000 | |
| Balance in Statement of Profit and Loss | ₹ 30,000 |
Solution
Debt to Equity Ratio= `"Long Term Debts"/"Shareholders' Funds"`
`= "Debentures"/"Equity Share Capital + Preference Share Capital + General Reserve + Balance in Statement of Profit and Loss "`
`= 75000/(75000 + 25000 + 45000 + 30000) = 0.43 : 1`
Total Assets to Debt Ratio =`"Total Assets"/"Long term Debts"`
`="Equity Share Capital + Preference Share Capital + General Reserve + Balance in Statement of Profit and Loss + Debentures + Trade Payables"/"Debentures"`
`= (75000 + 25000 + 45000 + 30000 + 75000 + 40000 + 10000)/75000 = 4 : 1`
Proprietary Ratio =`"Shareholder's Funds"/"Total Assets"`
`="Equity Share Capital + Preference Share Capital + General Reserve + Balance in Statement of Profit and Loss"/"Equity Share Capital + Preference Share Capital + General Reserve + Balance in Statement of Profit and Loss + Debentures + Trade Payables + Outstanding Expenses"`
`= (75000 + 25000 + 45000 + 30000)/(75000 + 25000 + 45000 + 30000 + 75000 + 40000 + 10000) = 0.58 : 1 "or" 58.33%`
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The average age of inventory is viewed as the average length of time inventory is held by the firm for which explain with reasons.
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| ₹ | ₹ | |||
| 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 |
Working Capital ₹ 1,80,000; Total Debts ₹ 3,90,000; Long-Term Debts ₹ 3,00,000.
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Quick Ratio of a company is 2:1. State giving reasons, which of the following transactions would
(i) improve, (ii) reduce, (iii) Not change the Quick Ratio:
(a) Purchase of goods for cash;
(b) Purchase of goods on credit;
(c) Sale of goods (costing ₹10,000) for ₹10,000;
(d) Sale of goods (costing ₹10,000) for ₹11,000;
(e) Cash received from Trade Receivables.
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 |
Calculate Debt to Equity Ratio from the following information:
| ₹ | ₹ | |||
| Fixed Assets (Gross) | 8,40,000 | Current Assets | 3,50,000 | |
| Accumulated Depreciation | 1,40,000 | Current Liabilities | 2,80,000 | |
| Non-current Investments | 14,000 | 10% Long-term Borrowings | 4,20,000 | |
| Long-term Loans and Advances | 56,000 | Long-term Provisions | 1,40,000 |
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Calculate Inventory Turnover Ratio from the following:
| ₹ | |
| Opening Inventory | 29,000 |
| Closing Inventory | 31,000 |
| Revenue from Operations, i.e., Sales | 3,20,000 |
| Gross Profit Ratio 25% | |
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Items excluded in liquid assets are:
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Balance Sheet (Extract)
| Liabilities | 31-03-2019 (₹) |
31-03-2020 (₹) |
| 12% debentures | 2,00,000 | 1,60,000 |
Additional Information:
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How much amount (related to above information) will be shown in Financing Activity for Cash Flow Statement prepared on 31st March, 2020?
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