Ratio Analysis Practice Questions - 2 PDF

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Ratio Analysis Practice Questions - 2Q1. Calculate Return on Capital Employed. (a) Equity Share Capitals = Rs. 5,00, (b) 10% Debenture = Rs. 2,00, (c) 5% Bank Loan = Rs. 1,50, (d) Reserve = Rs. 50, (e) Net Profit After Tax = Rs. 1,20, (f) Dividend paid during the year = Rs. 60, (g) Tax Paid = Rs. 40...

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Ratio Analysis Practice Questions - 2 Q1. Calculate Return on Capital Employed. (a) Equity Share Capitals = Rs. 5,00,000 (b) 10% Debenture = Rs. 2,00,000 (c) 5% Bank Loan = Rs. 1,50,000 (d) Reserve = Rs. 50,000 (e) Net Profit After Tax = Rs. 1,20,000 (f) Dividend paid during the year = Rs. 60,000 (g) Tax Paid = Rs. 40,000 [Answer: ROC = Rs. 20.83%] Q2. Calculate Liquid Assets. (a) Cash = Rs. 25,000 (b) Bank = Rs. 10,000 (c) Short Term Loan = Rs. 15,000 (d) Debtors = Rs. 40,000 (e) Stock = Rs. 25,000 (f) Bills Payable = Rs. 12,000 (g) Bills Receivable = Rs. 22,000 (h) Prepaid Expenses = Rs. 18,000 (i) Outstanding Expenses = Rs. 8,000 [Answer: Liquid Assets = Rs. 97,000] Q3. What is the effect of following transactions on current ratio i.e. 2:1, will the ratio improve, decline or not change: (a) Sale of Stock (b) Sale of Machinery Costing Rs.20,000 at a Loss of Rs.2,000 (c) Dividend Paid (d) Bills of exchange endorsed in favor of a creditor (e) Endorsed bill dishonored [Answer: (a) to (d) Increase and (e) Decrease] Q4. Find Net Profit Before Interest Tax and Dividend. (a) Net Profit After Interest, Tax and Dividend = Rs. 2,00,000. (b) Company is having 10% Debenture of Rs. 2,00,000 (c) 8% Mortgage Loan = Rs.2,50,000 (d) 5% Preference Share Capital = Rs. 3,00,000

(e) Tax Rate = 50%. [Answer: NPBIT = Rs. 4,70,000] Q5. Find Net Profit After Interest Tax and Dividend. (a) Net Profit Before Interest, Tax and Dividend = Rs. 5,00,000. (b) The rate of tax is 50% (c) Company has to pay an interest of 10% on its borrowed capital of Rs. 7,00,000. (d) 8% Preference Share Capital = Rs. 3,00,000. [Answer: NPAITD = Rs. 1,91,000] Q6. Find Working Capital. (a) Equity Share Capital = Rs. 2,00,000 (b) Preference share Capital = Rs. 1,00,000 (c) Mortgage Loan = Rs. 50,000 (d) Debenture = Rs. 1,50,000 (e) Reserve & Surplus = Rs. 1,20,000 (f) Preliminary expenses = Rs. 20,000 (g) Fixed Asset = Rs. 4,00,000 (h) Current Liabilities are 1,00,000 [Answer: Working Capital = Rs. 2,00,000] Q7. Calculate Current Ratio. (a) Total Assets = Rs. 22,00,000 (b) Fixed Assets = Rs.10,00,000 (c) Capital Employed = Rs. 20,00,000. There were no long---term investments. [Answer: Current Ratio = 6 : 1] Q8. Calculate Total Assets To Debt Ratio. (a) Equity Share Capital = Rs. 12,00,000 (b) General Reserve = Rs. 6,00,000 (c) 12% Debenture = Rs. 7,50,000 (d) Sales = Rs. 15,00,000 (e) Tax Paid During the Year = Rs.3,00,000 (f) Profit After Tax and Interest = Rs. 4,50,000. [Answer: Total Assets to Debt Ratio = 4 Times] Q9. From the following information, calculate Working Capital Turnover Ratio: (a) Gross Profit = 25% on cost (b) Gross Profit = Rs. 5,00,000 (c) Equity Share Capital = Rs. 10,00,000 (d) Reserves & Surplus = Rs. 2,00,000 (e) Long term Loans = Rs. 3,00,000 (f) Fixed Asset = Rs.10,00,000 [Answer: WCTR = 4 Times or 5 Times] Q10. Compute Return On Investment. (a) Net Profit After Tax = Rs. 6,00,000

(b) Tax Rate = 50% (c) 10% Debenture = Rs. 10,00,000 (d) Share Capital = Rs. 20,00,000 (e) Profit & Loss Account Opening Balance = Rs. 5,00,000 (f) Opening Balance of Loss on Issue of Debenture = Rs. 1,00,000 [Answer: ROI = 38.23%] Q11. Calculate Current Ratio. A company’s stock turnover ratio is 5 Times. Stock at the end of the year is Rs. 10,000 more than that at the beginning. Credit sales are Rs. 4,00,000 and Rate of Gross profit is 1/4th of cost. Current liabilities Rs.1,20,000 and Acid Test Ratio is 0.75. [Answer: Current Ratio = 1.32 : 1] Q12. Calculate Current Ratio. (a) Total Assets = Rs .6,00,000 (b) Fixed Assets = Rs. 3,20,000 (c) Shareholders’ Fund = Rs. 4,00,000 (d) Long Term liabilities = Rs. 1,60,000 (e) Investments = Rs. 2,00,000 [Answer: Current Ratio = 4.5 : 1] Q13. Find Stock Turnover Ratio. (a) Sales = Rs. 2,00,000 (b) Average Stock = Rs. 27,500 (c) Gross Loss Ratio is 10% [Answer: STR = 8 Times] Q14. Find Opening and Closing Debtors. (a) Debtor Turnover Ratio = 4 times (b) Cost Of Goods Sold = 6,40,000 (c) Gross Profit Ratio = 20% (d) Closing Debtors were Rs.20,000 more than at the beginning; (e) Cash Sales being 33.33% of Credit Sales. [Answer: Opening Debtors = Rs. 1,40,000 and Closing Debtors = Rs. 1,60,000] Q15. Calculate Gross Profit Ratio. (a) Operating Ratio = 60% (b) Office and Selling Expenses = 5% [Answer: Gross Profit Ratio = 45%] Q16. Calculate Net Profit Ratio. (a) Return on Investment = 50% (b) Capital Turnover Ratio = 4 Times [Answer: NPR = 12.5%]

Q17. Calculate Gross Profit Ratio from the following data: (a) Cash Sales being 25% of Total Sales. (b) Purchases = Rs. 6,90,000 (c) Credit Sales = Rs. 6,00,000; (d) Excess of Closing Stock over Opening Stock = Rs. 50,000 [AnswerGPR = 20%] Q18. A trader carries an average stock of Rs. 75,000. His Stock Turnover is 12 Times.Find out profit, if he sells at a profit of 20% on Sales. [Answer: Profit Rs. 2,25,000] Q19. Mr. Vijay owns a business and gives the following figures:

Sales Gross Profit Current Asset Current Liabilities

2012 2013 9,00,000 18,00,000 2,25,000 3,60,000 3,00,000 4,50,000 1,50,000 2,50,000

He is of the opinion that his manager Rajeev is very efficient as there is an increase in profitfrom 2,25,000 to Rs. 3,60,000 by his efforts. His Current Asset are increasing from Rs.3,00,000 to Rs. 4,50,000 whereas Current Liabilities increase only by Rs. 1,00,000 and thushis short term financial position is also becoming strong. Do you agree with him? State yes/no. Give reason for your answer. [Answer: GPR = 25%, 20%; Current Ratio = 2 : 1, 1.8 : 1] Q20. From the following information, find out: (a) Current assets (b) Current liabilities (c) Liquid Asset (d) Proprietor's Fund (e) Share Capital (f) Fixed Assets (g)Stock in trade Information: (1) Current ratio = 2.5 : 1 (2) Liquid Ratio = 1.5:1 (3) Proprietary Ratio (Fixed asset/Proprietary Fund) = 0.75 (4) Working Capital Rs. 60,000 (5) Reserve & surplus= Rs.40,000 (6) Bank Overdraft = Rs. 10,000. There is no long---term loan or fictitious asset. [Answer: C.A. = Rs. 1,00,000; C.L= Rs. 40,000; Liquid Assets = Rs. 60,000; Stock = Rs. 40,000; Share Capital = Rs. 2,00,000; FA = Rs. 1,80,000]...