# Question 112 Chapter 4 of +2-B – USHA Publication 12 Class Q-112- CH-4 Book 2 - Usha Pub. +2 Book 2020 - Solution

Question 112 Chapter 4 of +2-B

Miscellaneous (Analytical Questions)

112. (Liquid Ratio/GP Ratio/Debt Equity Ratio) From the following information calculate the following ratios (i) Liquid Ratio (ii) Gross Profit Ratio (iii) Debt Equity Ratio Information :

 ₹ Net Sales (Revenue from Operation) 4,00,000 Opening Inventory 10,000 Closing Inventory 3,000 Less than opening inventory Net purchases 80% of Net sales Direct Expenses 20,000 Current Assets 1,00,000 Prepaid Expenses 3,000 Current Liabilities 60,000 9% Debentures 4,00,000 Long term Loans from bank 1,50,000 Equity Share capital 8,00,000 8% Preference share capital 3,00,000

## The solution of Question 112 Chapter 4 of +2-B: –

 (i) Liquid Ratio = Liquid Assets Current Liabilities = ₹ 94,000 ₹ 60,000 = 1.57: 1
 (ii) Gross Profit Ratio = Gross Profit X 100 Net Sales = ₹ 57,000 X 100 ₹ 4,00,000 = 14.25%
 (iii) Debt Equity Ratio = Debt Equity = ₹ 5,50,000 ₹ 11,00,000 = 0.5: 2

Working Notes :

 Liquid Assets = Current Assets – Closing Stock – Prepaid Expenses = ₹ 1,00,000 – ₹ 3,000 – ₹ 3,000 = ₹ 94,000 Cost of goods Sold = Opening Stock + Purchases + Direct Expenses – Closing Stock* = ₹ 10,000 + ₹ 4,00,000 x 80% + ₹ 20,000 – ₹ 7,000 = ₹ 3,43,000 Gross Profit = Sales – Cost of goods Sold = ₹ 4,00,000 – ₹ 3,43,000 = ₹ 57,000 *Closing Stock = 3,000 Less than opening inventory = ₹ 10,000 – ₹ 3,000 = ₹ 7,000 Debt = 9% Debentures + Long from Bank = ₹ 4,00,000 + ₹ 1,50,000 = ₹ 5,50,000 Equity = Equity Share Capital + 8% Preference Capital = ₹ 8,00,000 + ₹ 3,00,000 = ₹ 11,00,000

Also, Check out the solved question of previous Chapters: –