# 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 Current Liabilities = ₹ 3,71,000 ₹ 1,95,000 = 1.9: 1
 (iii) Proprietary Ratio = Shareholder’s Fund 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

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