Question 119 Chapter 4 of +2-B - USHA Publication 12 Class

Question 119 Chapter 4 of +2-B

Miscellaneous (Analytical Questions)

119. (Operating Ratio/Liquid Ratio/Proprietary Ratio) From the following information calculate the
(a) Operating ratio (b) Liquid Ratio (c) Proprietary Ratio Information :
Cash Sales (Revenue from Operation) ₹ 4,00,000, Credit Sales ₹ 2,75,000. Sales Returns ₹ 27,000 Cost of Revenue from operation ₹ 3,90,000. Selling and Distribution Expenses ₹ 7,000. Administration Expenses ₹ 3,000. Current Liabilities ₹ 1,95,000. Current Assets ₹ 3,94,000. Closing Inventories ₹ 23,000. Equity share capital ₹ 4,37,000. 6% Preference share capital ₹ 1,74,000. Fixed Assets ₹ 4,30,000.

The solution of Question 119 Chapter 4 of +2-B: –

(i) Operating Ratio	=	Operating Cost	X	100
		Net Sales

	=	₹ 4,00,000	X	100
		₹ 6,48,000
	=	61.72%

(ii) Liquid Ratio	=	Quick Assets
(ii) Liquid Ratio	=	Current Liabilities

	=	₹ 3,71,000
	=	₹ 1,95,000
	=	1.9: 1

(iii) Proprietary Ratio	=	Shareholder’s Fund
(iii) Proprietary Ratio	=	Total Assets

	=	₹ 6,11,000
	=	₹ 8,24,000
	=	0.74: 1

Working Notes:-

Net Sales	=	Cash sales + Credit Sales – Sales Return
	=	₹ 4,00,000 + ₹ 2,75,000 – ₹ 27,000
	=	₹ 6,48,000
Quick Assets	=	Current Assets – Stock
	=	₹ 3,94,000 – ₹ 23,000
	=	₹ 3,71,000
Shareholder’s Fund	=	Equity Share Capital + Preference Share Capital
	=	₹ 4,37,000 + ₹ 1,74,000
	=	₹ 6,11,000
Total Assets	=	Current Assets + Fixed Assets
	=	₹ 3,94,000 + ₹ 4,30,000
	=	₹ 8,24,000

End of Solution

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