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Question 117 Chapter 4 of +2-B
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Table of Contents
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 | |
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Calculate the following ratios
(i) Quick ratio (ii) Inventory Turnover Ratio (ii) Return on Shareholders Investment
The solution of Question 117 Chapter 4 of +2-B: –
(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 |
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Also, Check out the solved question of previous Chapters: –
Usha Publication – Accountancy PSEB (Class 12) – Volume I – Solution
- Chapter No. 1 – Accounting Not for Profit Organisations
- Chapter No. 2 – Partnership Accounts – I (Introduction)
- Chapter No. 3 – Partnership Accounts – II (Goodwill: Nature and Valuation)
- Chapter No. 4 – Partnership Accounts – III (Reconstitution of Partnership)
- Chapter No. 5 – Partnership Accounts – IV (Admission of A Partner)
- Chapter No. 6 – Partnership Accounts – V (Retirement and Death of A Partner)
- Chapter No. 7 – Partnership Accounts – VI (Dissolution of Partnership Firm)
- Chapter No. 8 – Company Accounts (Share Capital)
- Chapter No. 9 – Company Accounts (Issue of Debentures)
- Chapter No. 10 – Company Accounts (Redemption of Debentures)
Usha Publication – Accountancy PSEB (Class 12) – Volume II – Solution
- Chapter No. 1 – Financial Statements of a Company
- Chapter No. 2 – Financial Statement Analysis
- Chapter No. 3 – Tools of Financial Statement Analysis- Comparative and Common Size
- Chapter No. 4 – Ratio Analysis
- Chapter No. 5 – Cash Flow Statement
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