1 03.

Ratio Analysis
Income Statement

Income Statement

Balance Sheet
 CA Rahul Panchal

7. RATIO ANALYSIS

MAY – 2023 – 10 MARKS

Following information and ratios are given in respect of AQUA Ltd. for the year ended 31st March,
2023:
Current ratio 4.0
Acid test ratio 2.5
Inventory turnover ratio (based on sales) 6
Average collection period (days) 70
Earnings per share 3.5
Current liabilities 3,10,000
Total assets turnover ratio (based on sales) 0.96
Cash ratio 0.43
Proprietary ratio 0.48
Total equity dividend 1,75,000
Equity dividend coverage ratio 1.60
Assume 360 days in a year.
You are required to complete Balance Sheet as on 31st March, 2023.
Balance Sheet as on 31st March, 2023
Liabilities (`) Assets (`)
Equity share capital (`10 per share) XXX Fixed Assets XXX
Reserve & surplus XXX Inventory XXX
Long-term debt XXX Debtors XXX
Current liabilities 3,10,000 Loans & advances XXX
Cash & bank XXX
Total XXX Total XXX

NOV – 2022 – 5 MARKS

The following figures are related to the trading activities of M Ltd.:
Total assets - `10,00,000
Debt to total assets - 50%
Interest cost - 10% per year
Direct cost - 10 times of the interest cost
Operating expenses - `1,00,000

The goods are sold to customers at a margin of 50% on the direct cost. Tax rate is 30%. You are
required to calculate:
(a) Net profit margin
(b) Net operating profit margin
(c) Return on assets
(d) Return on owner’s equity

3.1
CAPITAL STRUCTURE
 CA Rahul Panchal

MAY – 2022 – 5 MARKS

Following information and ratios are given for W Limited for the year ended 31st March, 2022:
Equity share capital of `10 each `10 lakhs
Reserve & Surplus to shareholder’s fund 0.50
Sales / Shareholder’s fund 1.50
Current ratio 2.50
Debtors Turnover Ratio 6.00
Stock Velocity 2 Months
Gross Profit Ratio 20%
Net Working Capital Turnover Ratio 2.50
You are required to calculate:
(i) Shareholder’s fund
(ii) Stock
(iii) Debtors
(iv) Current liabilities
(v) Cash Balance

DECEMBER – 2021 – 10 MARKS

Following are the data in respect of ABC Industries for the year ended 31st March, 2021:
Debt to Total assets ratio : 0.40
Long-term debts to equity ratio : 30%
Gross profit margin on sales : 20%
Accounts receivables period : 36 days
Quick ratio : 0.9
Inventory holding period : 55 days
Cost of goods sold : `64,00,000

Liabilities ` Assets `
Equity Share Capital 20,00,000 Fixed assets
Reserve & surplus Inventories
Long-term debts Accounts receivable
Accounts payable Cash
Total 50,00,000 Total
Required:
Complete the balance sheet of ABC Industries as on 31st March, 2021. All calculations should be
in nearest rupee. Assume 360 days in a year.

JULY – 2021 – 10 MARKS

Masco Limited has furnished the following ratios and information relating to the year ended 31st
March 2021:
Sales ` 75,00,000
Return on net worth 25%
Rate of income tax 50%
Share capital to reserves 6:4
Current ratio 2.5
Net profit to sales (After Income Tax) 6.50%

3.2
CAPITAL STRUCTURE
 CA Rahul Panchal

Inventory turnover (based on cost of goods sold) 12

Cost of goods sold ` 22,50,000
Interest on debentures ` 75,000
Receivables (includes debtors ` 1,25,000) ` 2,00,000
Payables ` 2,50,000
Bank Overdraft ` 1,50,000
You are required to:
(a) Calculate the operating expenses for the year ended 31st March, 2021.
(b) Prepare a balance sheet as on 31st March in the following format:
Liabilities ` Assets `
Share Capital Fixed Assets
Reserves and Surplus Current Assets
15% Debentures Stock
Payables Receivables
Bank Overdraft Cash

JAN – 2021 – 5 MARKS

From the following information, complete the Balance sheet given below:
(i) Equity `2,00,000
(ii) Total debt to owner’s equity 0.75
(iii) Total assets turnover 2 times
(iv) Inventory turnover 8 times
(v) Fixed assets to owner’s equity 0.60
(vi) Current debt to total debt 0.40

NOV – 2020 – 5 MARKS

Following information relates to RM Co. Ltd.
(`)
Total Assets employed 10,00,000
Direct Cost 5,50,000
Other Operating Cost 90,000

Goods are sold to the customers at 150% of direct costs.

50% of the assets being financed by borrowed capital at an interest cost of 8% per annum. Tas
rate is 30%
You are required to calculate:
(i) Net profit margin
(ii) Return on Assets
(iii) Asset turnover
(iv) Return on owners’ equity

NOV – 2019 – 5 MARKS

Following information has been gathered from the books of Tram Ltd. the equity share of which
is trading in the stock market at `14.

3.3
CAPITAL STRUCTURE
 CA Rahul Panchal

Particulars Amount (`)

Equity Share Capital (face value `10) 10,00,000
10% Preference Shares 2,00,000
Reserves 8,00,000
10% Debentures 6,00,000
Profit before Interest and Tax for the year 4,00,000
Interest 60,000
Profit after tax for the year 2,40,000
Calculate the following:
(a) Return on Capital Employed
(b) Earnings per share
(c) PE Ratio

MAY – 2019 – 5 MARKS

Following figures and ratios are related to a company of Q Ltd.:
Sales for the year (all credit) `30,00,000
Gross profit ratio 25%
Fixed assets turnover ratio (based on cost of goods sold) 1.5
Stock turnover ratio (based on cost of goods sold) 6
Liquid ratio 1:1
Current Ratio 1.5
Receivables (Debtors) collection period 2 months
Reserves & surplus to share capital 0.60:1
Capital gearing ratio 0.5
Fixed assets to net worth 1.20:1
You are required to calculate:
Closing stock, Fixed Assets, Current Assets, Debtors and Net Worth.

NOV – 2018 – 5 MARKS

The following is the information of XML Ltd. relate to the year ended 31-03-2018:
Gross Profit 20% of Sales
Net Profit 10% of sales
Inventory Holding Period 3 months
Receivable collection period 3 months
Non-current assets to sales 1:4
Non-current assets to current assets 1:2
Current Ratio 2:1
Non-current liabilities to current liabilities 1:1
Share capital to Reserve and Surplus 4:1
Non-current assets as on 31st March, 2017 `50,00,000
Assume that:
(a) No change in Non-current assets during the year 2017-18
(b) No depreciation changed on Non-Current Assets during the year
(c) Ignoring tax
You are required to calculate cost of goods sold, net profit, inventory, receivables and cash for
the year ended on 31st March, 2018.

3.4
CAPITAL STRUCTURE
 CA Rahul Panchal

MAY – 2018 – 5 MARKS

The accountant of Moon Ltd. has reported the following data:
Gross Profit `60,000
Gross profit Margin 20 per cent
Total Assets Turnover 0.30:1
Net Worth to Total Assets 0.90:1
Current Ratio 1.5:1
Liquid Assets to Current Liability 1:1
Credit sales to total sales 0.80:1
Average collection period 60 days

Assume 360 days in a year.

You are required to complete the following:
Balance Sheet of Moon Ltd.
Liabilities ` Assets `
Net Worth Fixed Assets
Current Liabilities Stock
Debtors
Cash
Total Liabilities Total Assets

3.5
CAPITAL STRUCTURE