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Question 117 Chapter 14 of Class 12 Part – 2 – 2024
Miscellaneous (Analytical Questions)
117. (Quick Ratio/Inventory T/O Ratio/Return on Shareholders' Investment) The following are the Summarised Statement of Profit and Loss of Hindustan Products for the year ended 31.3.2018 and the Balance sheet of the company as of that date.
STATEMENT OF PROFIT AND LOSS
| Particulars | ₹ | |
| Revenue from Operations | 8,00,000 | |
| Less : Expenses | ||
| Purchases | 5,45,000 | |
| Changes in Inventories | (1,00,000) | |
| (Opening Inventory - Closing Inventory) | ||
| (₹ 99,000 - ₹ 1,99,000) | ||
| Direct Expenses | 15,000 | |
| Selling & Distribution Expenses | 2,40,000 | |
| Loss on Sale of Assets | 40,000 | 7,40,000 |
| Net Profit | 60,000 |
BALANCE SHEET
| Particulars | ₹ |
| I. Equity and Liabilities | |
| Shareholders' Funds | |
| Equity Share Capital | 2.90.000 |
| Reserves and Surplus | |
| Surplus in Statement of Profit and Loss | 60,000 |
| Current Liabilities | |
| Trade Payable | 1,15,000 |
| Outstanding Expenses | 15,000 |
| 4,80,000 | |
| II. Assets : | |
| Non-Current Assets | |
| Tangible Assets | |
| Land | 2,30,000 |
| Current Assets | |
| Inventory | 1,99,000 |
| Trade Receivable | 21,000 |
| Cash | 30,000 |
| 4,80,000 |
Calculate the following ratios
(i) Quick ratio (ii) Inventory Turnover Ratio (ii) Return on Shareholders Investment
| (i) Quick Ratio | = | Quick Assets |
| Current Liabilities | ||
| = | ₹ 51,000 | |
| ₹ 1,30,000 | ||
| = | 0.39 : 1 |
| (ii) Inventory Turnover Ratio | = | Cost of goods sold |
| Average Inventory | ||
| = | ₹ 4,60,000 | |
| ₹ 1,49,000 | ||
| = | 3.08 times |
| (i) Return on investment Ratio | = | Net Profit | X | 100 |
| Shareholders Funds | ||||
| = | ₹ 60,000 | X | 100 | |
| ₹ 3,50,000 | ||||
| = | 17.14% |
Working Notes:-
| Quick Assets | = | Trade Receivable + Cash |
| = | ₹ 21,000 + ₹ 30,000 | |
| = | ₹ 51,000 | |
| Current Assets | = | Inventory + Trade Receivable + Bank + Cash |
| = | ₹ 78,400 + ₹ 36,000 + ₹ 10,000 + ₹ 2,000 | |
| = | ₹ 1,26,400 | |
| Current Liabilities | = | Trade Payable + Outstanding Expenses |
| = | ₹ 1,15,000 + ₹ 15,000 | |
| = | ₹ 1,30,000 | |
| Cost of goods sold | = | Opening stock + Purchases + Direct Expenses – Closing Stock |
| = | ₹ 99,000 + ₹ 5,45,000 + ₹ 15,000 - ₹ 1,99,000 | |
| = | ₹ 4,60,000 | |
| Shareholders’ Funds | = | Share capital + Surplus in Statement of Profit & Loss |
| = | ₹ 2,90,000 + ₹ 60,000 | |
| = | ₹ 3,50,000 |
| Average Inventory | = | Opening Inventory + Closing Stock |
| 2 | ||
| = | ₹ 99,000 + ₹ 1,99,000 | |
| 2 | ||
| = | ₹ 1,49,000 |
Accounting & Commerce Educator
Sarbjit Singh holds a B.Com and M.Com degree and has over 12 years of teaching experience in double entry bookkeeping, financial accounting, and business studies.
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