# Question 143 Chapter 4 of +2-B – T.S. Grewal 12 Class

Question No. 143- Chapter No.4 - T.S. Grewal +2 Book Part B

Question 143 Chapter 4 of +2-B

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