Question 143 Chapter 4 of +2-B
Table of Contents
Miscellaneous
143. On the basis of the following information calculate:
(i) Debt to Equity Ratio; and
(ii) Working Capital Turnover Ratio.
Information:
| Rs | Rs | |||
| Revenue from Operations | (a) Cash Sales | 40,00,000 | Paid-up Share Capital | 17,00,000 |
| (b) Credit Sales | 20,00,000 | 6% Debentures | 3,00,000 | |
| Cost of Goods Sold | 35,00,000 | 9% Loan from Bank | 7,00,000 | |
| Other Current Assets | 8,00,000 | Debentures Redemption Reserve | 3,00,000 | |
| Current Liabilities | 4,00,000 | Closing Inventory | 1,00,000 |
The solution of Question 143 Chapter 4 of +2-B: –
I
| Long-term Debts | = | 6% Debentures + 9% Loan from Bank |
| = | Rs 3,00,000 – Rs 7,00,000 | |
| = | Rs 10,00,000 | |
| Equity | = | Paid-up Share Capital + Debenture Redemption Reserve |
| = | Rs 17,00,000 – Rs 3,00,000 | |
| = | Rs 20,00,000 |
| Debt – Equity Ratio | = | Long-term Debts |
| Equity |
| Gross Profit Ratio | = | Rs. 10,00,000 |
| Rs 20,00,000 | ||
| = | 0.5 : 1 | |
II
| Current Assets | = | Other Current Assets + Inventory |
| = | Rs 8,00,000 + Rs 1,00,000 | |
| = | Rs 9,00,000 | |
| Working Capital | = | Current Assets − Current Liabilities |
| = | Rs 9,00,000 – Rs 4,00,000 | |
| = | Rs 5,00,000 | |
| Net Sales | = | Cash Sales + Credit sales |
| = | Rs 40,00,000 + Rs 20,00,000 | |
| = | Rs 60,00,000 |
| Working Capital Turnover Ratio | = | Net Sales |
| Working Capital |
| Operating Ratio | = | Rs. 60,00,000 |
| Rs 5,00,000 | ||
| = | 12 Times |
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T.S. Grewal’s Double Entry Book Keeping +2 (Vol. I: Accounting for Not-for-Profit Organizations and Partnership Firms)
- Chapter No. 1 – Financial Statement of Not-For-Profit Organisations
- Chapter No. 2 – Accounting for Partnership Firms – Fundamentals
- Chapter No. 3 – Goodwill: Nature and Valuation
- Chapter No. 4 – Change in Profit-Sharing Ratio Among the Existing Partners
- Chapter No. 5 – Admission of a Partner
- Chapter No. 6 – Retirement/Death of a Partner
- Chapter No. 7 – Dissolution of a Partnership Firm
T.S. Grewal’s Double Entry Book Keeping (Vol. II: Accounting for Companies)
- Chapter No. 8 – Company Accounts – Accounting for Share Capital
- Chapter No. 9 – Company Accounts – Issue of Debentures
- Chapter No. 10 – Redemption of Debentures
T.S. Grewal’s Double Entry Book Keeping (Vol. II: Accounting for Companies)
- Chapter No. 1 – Financial Statements of a Company
- Chapter No. 2 – Financial Statement Analysis
- Chapter No. 3 – Tools of Financial Statement Analysis – Comparative Statements and Common- Size Statements
- Chapter No. 4 – Accounting Ratios
- Chapter No. 5 – Cash Flow Statement
Check out T.S. Grewal +2 Book 2020@ Official Website of Sultan Chand Publication
