Problems –Ratio Analysis

1. From the following calculate the current ratio:

Particulars Amount (in Rs)

Cash in hand 2,00,000
Sundry debtors 80,000
Stock 1,20,000
Sundry Creditors 1,50,000
Bills Payable 50,000

2. Calculate Liquid Ratio

Particulars Amount (in Rs)

Current Assets 20,000
Stock 3,000
Prepaid expenses 1,000
Current liabilities 8,000

3. From the following information, calculate current ratio and liquid ratio

Particulars Amount (in Rs) Particulars Amount (in Rs)

Cash 5,000 Debtors 29,000
Bills receivable 5,000 Short term 15,000
investment
Stock 52,000 Prepaid expenses 2,000
Creditors 36,000 Bills payable 10,000
Outstanding expenses 8,000

4. From the following calculate current ratio and liquid ratio

Balance sheet of Gopi Co.Ltd., as on 31.03.2021

Liabilities Amount (in Rs) Assets Amount (in Rs)

Share capital 6,300 Fixed assets 5,100
Reserves 1,200 Stock 2,100
Bank overdraft 600 Debtors 960
Creditors 1,800 Cash 1,740
9,900 9,900

5. From the following you are required to calculate liquidity ratios

 Particulars Amount (in Rs) Particulars Amount (in Rs)
Debtors 5,000 Creditors 4,000
Cash in hand 4,000 Bills payable 3,000
Cash at bank 6,000 Outstanding 250
expenses
Short term 2,000 Bills receivable 3,000
investments
Prepaid expenses 1,000 Closing stock 8,000
6. From the following information, calculate current ratio, liquid ratio and
absolute liquid ratio

Particulars Amount (in Rs) Particulars Amount (in Rs)

Cash 1,800 Creditors 5,000
Debtors 14,200 Outstanding expenses 1,500
Stock 18,000 Bank overdraft 7,500
Bills Payable 2,700

7. From the following compute current ratio

Particulars Amount (in Rs)

Stock in hand 1,00,000
Creditors 60,000
Debtors 80,000
Bills Payable 10,000
Cash in hand 40,000
Prepaid expenses 5,000
Bills receivable 45,000

8. From the following information calculate current Ratio:

Current Assets Amount (Rs) Current Liabilities Amount (Rs.)

Inventory 5,60,000 Creditors 4,90,000
Debtors 3,50,000 Bank Loan 2,10,000
Cash 70,000
9,80,000 7,00,000

9. From the following information, calculate current ratio:

Particulars Amount (in Rs) Particulars Amount (in Rs)

Trade receivables (debtors) 1, 00,000 Bills payable 20,000
Prepaid Expenses 10,000 Sundry Creditors 40,000
Cash and cash equivalents 30,000 Debentures 2,00,000
Short term investments 20,000 Inventories 40,000
Machinery 7,000 Expenses Payable 40,000

10. From the following information calculate current Ratio:

Liabilities Amount (Rs) Assets Amount (Rs.)

Share capital 2,00,000 Land and 1,40,000
Buildings
Profit and Loss 30,000 Plant and 3,50,000
account Machinery
General Reserve 40,000 Stock 2,00,000
12% Debentures 4,20,000 Sundry Debtors 1,00,000
Sundry Creditors 1,00,000 Bills Receivable 10,000
Bills Payable 50,000 Cash at Bank 40,000
8,40,000 8,40,000

Profitability Ratio

1. From the following calculate Gross profit ratio

Particulars Amount (Rs)

Gross Profit 50,000
Sales 5,50,000
Sales Return 50,000

2. From the following calculate Gross profit ratio

Particulars Amount (Rs)

Sales 6,50,000
Cost of goods sold 4,80,000
Sales Return 50,000

3. From the following calculate net profit ratio

Particulars Amount (Rs)

Net profit 4,000
 Sales 44,000
Sales Return 4,000

4. Calculate operating profit ratio

Particulars Amount (in Rs) Particulars Amount (in Rs)

Gross Profit 1,00,000 Operating 40,000
expenses
Sales 6,02,000 Sales Return 2,000

5. From the Trading and Profit and Loss account of Fashions world Ltd.,
ascertain the profitability ratios:
Trading and Profit and Loss account for the year ending 31.03.2021

Particulars Amount (in Rs) Particulars Amount (in Rs)

To opening stock 20,000 By sales 1,60,000
To purchases 1,20,000 By Closing 32,000
stock
To Gross profit 52,000
(Transferred to profit
and loss account)
1,92,000 1,92,000
To administration 12,000 By gross profit 52,000
expenses
To selling expenses 8,000 By dividend 400
To finance expenses 4,000
To loss on the sale 500
of furniture
To net profit 27,900
52,400 52,400

6. From the Trading and Profit and Loss account of Best company Pvt.
Ltd., ascertain the profitability ratios:
Trading and Profit and Loss account for the year ending 31.03.2021

Particulars Amount (in Rs) Particulars Amount (in Rs)

To opening stock 1,99,000 By sales 17,00,000
To purchases 11,19,000 By Closing 2,98,000
stock
To Gross profit 6,80,000
(Transferred to profit
and loss account)
19,98,000 19,98,000
To administration 3,00,000 By gross profit 6,80,000
expenses
To selling expenses 60,000 By dividend 18,000
To finance expenses 30,000
To loss on the sale 8,000
of furniture
To net profit 3,00,000
6,98,000 6,98,000

7. From the following calculate operating profit ratio and operating ratio,
Gross profit ratio, Net profit ratio.

Particulars Amount (in Rs) Particulars Amount (in Rs)

Sales 1,00,000 Dividend 400
received
Gross profit 30,000 Net profit 26,600
Administration 1,000
expenses
Selling expenses 2,000
Loss on sale of 800
investment

8. From the following particulars calculate Gross profit ratio

Particulars Amount (in Rs)

Cash sales 30,000
Credit Sales 1,70,000
Return inwards 5,000
Gross profit 58,500

9. Calculate Gross Profit Ratio

Trading a/c for the year 2020

Particulars Amount (in Rs) Particulars Amount (in Rs)

To opening stock 1,00,000 By sales 4,50,000
To purchases 3,50,000 By closing 1,50,000
stock
To Gross profit 1,50,000
6,00,000 6,00,000

10. Following is the Trading and Profit and Loss a/c of a company for
the year ending 31.03.2020.

Particulars Amount (in Rs) Particulars Amount (in Rs)

To opening stock 1,00,000 By sales 5,60,000
To purchases 3,50,000 By closing 1,00,000
stock
To wages 9,000
To Gross Profit 2,01,000
6,60,000 6,60,000
To administrative 20,000 By gross profit 2,01,000
expenses
To selling and 89,000 By non 18,000
distribution operating
expenses income
To non operating 30,000
expenses
To Net profit 80,000
2,19,000 2,19,000

Calculate Profitability ratio

Turnover Ratio

1. From the following data, calculate the Fixed asset turnover ratio

Particulars Amount (Rs)

Fixed Assets 3,00,000
Depreciation 1,00,000
Total sales 8,50,000
Sales Return 50,000

2. Calculate Fixed Assets turnover ratio

Particulars Amount (Rs)

Fixed Assets 1,00,000
Depreciation 25,000
Sales 3,00,000
3. Calculate Fixed Assets turnover ratio

Particulars Amount (Rs)

Fixed Assets 1,50,000
Sales 4,50,000

4. From the following determine the stock turnover ratio

Particulars Amount
Opening stock 40,000
Closing stock 30,000
Purchases 95,000

5. From the following determine the stock turnover ratio

Particulars Amount
Opening stock 15,000
Closing stock 25,000
Purchases 60,000

6. Compute debtors turnover ratio

Particulars Amount
Total sales 7,50,000
Sales return 50,000
Opening debtors 1,17,000
Closing debtors 83,000

7. From the following determine debtors turnover ratio

Particulars Amount Particulars Amount

Total sales 1,75,000 Cash sales 35,000
Sales return 10,000 Opening debtors 8,000
Closing debtors 12,000

8. From the following determine creditors turnover ratio

 Particulars Amount Particulars Amount
Total purchases 85,000 Cash purchases 20,000
Purchase return 5,000 Opening creditors 25,000
Closing creditors 15,000

9. Calculate capital turnover ratio

Particulars Amount Particulars Amount

Sales 10,20,000 Sales return 20,000
Equity share capital 1,00,000 Loans 25,000
Preference share capital 50,000 Reserves 25,000
10. From the following balance sheet, calculate debtors turnover , creditors , capital
turnover and fixed turnover ratio

Liabilities Amount Assets Amount

Share capital 4,00,000 Land and Building 3,00,000
Reserves 2,40,000 Plant and Machinery 1,60,000
Creditors 2,60,000 Stock 2,96,000
6% Debentures 60,000 Debtors 1,42,000
Cash 62,000

Additional information:
1. Credit purchases during the year is Rs. 10,40,000
2. Credit sales during the year is Rs.4,26,000.

Solvency Ratio

1. Calculate Debt – Equity ratio

Particulars Amount (in Rs)

Equity share capital 2,00,000
General Reserve 1,50,000
Long term loan 50,000
Debentures 1,00,000

2. From the following balance sheet calculate 1. Current ratio 2. Liquid ratio 3. Debt
equity ratio 4. Proprietary ratio.

Balance sheet of Jasmine Ltd as on 31.03.2004

Liabilities Amount (Rs) Assets Amount (Rs)

Share capital 20,000 Goodwill 12,000
 Reserves 10,000 Fixed assets 28,000
Loans 16,000 Stock 8,000
Creditors 10,000 Debtors 4,000
Bank overdraft 4,000 Bills receivable 2,000
Cash 6,000
60,000 60,000

3. Calculate Debt – Equity ratio

Particulars Amount (Rs)

Equity share capital 5,00,000
Preference share capital 3,00,000
Profit and loss a/c (credit balance) 1,00,000
Reserve fund 1,00,000
Debentures 3,00,000
Loan from ICICI bank (long term) 2,00,000
Creditors 20,000
Bills payable 10,000

4. From the following balance sheet of KGR ltd., you are required to calculate the
solvency ratio:
Balance sheet

Liabilities Amount (Rs) Assets Amount (Rs)

Share capital 4,00,000 Cash 10,000
Profit and loss a/c 50,000 Debtors 1,26,000
Reserves 50,000 Inventory 1,80,000
Debentures 50,000 Investment (Short term) 70,000
Creditors 57,000 Equipments 2,70,000
Bills payable 60,000 Preliminary expense 11,000
6,67,000 6,67,000

5. The following are the Balance sheet of Archita Ltd., for the year 2014 and 2015

You are required to compute: 1. Current Ratio 2. Acid test Ratio 3. Proprietary Ratio 4.
Fixed assets to shareholders fund.

Liabilities 2014 2015 Assets 2014 2015

Share capital 1,00,000 1,00,000 Fixed Assets 2,00,000 2,30,000
Reserves 50,000 50,000 Stock 40,000 60,000
Profit and loss 50,000 1,00,000 Debtors 30,000 60,000
a/c
8% debentures 50,000 80,000 Cash 20,000 30,000
 Sundry 40,000 50,000 Prepaid 10,000 20,000
creditors Expenses
Proposed 10,000 20,000
dividends
3,00,000 4,00,000 3,00,000 4,00,000

Market Test Ratio

1. From the following information calculate 1. Dividend yield ratio 2. Dividend

coverage ratio 3. Price earnings ratio

Particulars Amount
9 % preference shares (Rs. 10 each) 3,00,000
Equity shares (Rs. 10 each) 8,00,000
Total 11,00,000
PAT (tax – 60%) 2,70,000
Depreciation 60,000

Equity dividend paid – 20%

Market Price per share – Rs. 40

Comparative Income statement and Balance sheet

1. The following are the income statements of Excel Ltd for the year ending 31-12-2010
and 31-12-2011.You are required to prepare a comparative income statement for the
two years:

Particulars 31-12-2010 (Rs) 31-12-2011 (Rs)

Net sales 10,00,000 12,00,000
Cost of sales 5,50,000 6,50,000
Operating expense
Administrative expenses 80,000 1,00,000
Selling 60,000 80,000
Non operating expenses
Interest 40,000 50,000
Income tax 50,000 80,000

2. The following are the income statements of Orange Ltd., for the year ending 31-12-2009
and 31-12-2010. You are required to prepare a comparative income statement for the two
years:

Particulars 31-12-2009 (Rs) 31-12-2010 (Rs)

Net sales 20,00,000 24,00,000
Cost of sales 11,00,000 12,50,000
Operating expense
Administrative expenses 1,90,000 2,00,000
Selling 80,000 1,00,000
Non operating expenses
Interest 50,000 60,000
Income tax 60,000 90,000

3. Milka Ltd furnishes the following Balance sheet for the year 2011 and 2012 and
requested you to prepare a comparative Balance sheet for those years.

Liabilities 2011 (Rs) 2012 (Rs) Assets 2011 (Rs) 2012 (Rs)
Equity share 1,20,000 1,20,000 Land and 1,00,000 90,000
capital Buildings
9% 80,000 90,000 Plant and 1,20,000 1,00,000
debentures Machinery
Profit and 60,000 70,000 Furniture 20,000 30,000
loss a/c
Sundry 50,000 70,000 Inventory 40,000 60,000
creditors
Bills payable 30,000 20,000 Debtors 40,000 80,000
Cash 20,000 10,000
3,40,000 3,40,000 3,40,000 3,40,000

4. Vijay Ltd., furnishes the following balance sheet for the year 2003 and 2004 and
requested you to prepare a comparative balance sheet for those years:

Liabilities 2011 (Rs) 2012 (Rs) Assets 2011 (Rs) 2012 (Rs)
Equity share 2,00,000 2,20,000 Land and 1,50,000 1,40,000
capital Buildings
9% 80,000 1,00,000 Plant and 1,30,000 1,20,000
debentures Machinery
Profit and 80,000 90,000 Furniture 40,000 60,000
loss a/c
Sundry 60,000 90,000 Inventory 40,000 60,000
creditors
Bills payable 20,000 30,000 Debtors 40,000 90,000
Cash 40,000 60,000
4,40,000 5,30,000 4,40,000 5,30,000

5. From the following information of Santro ltd for the year ended 2010 and 2011.
Prepare common size income statement for the two years.
Particulars 2010 (Rs) 2011 (Rs) Particulars 2010 (Rs) 2011 (Rs)
To cost of 2,40,000 3,50,000 By sales 4,00,000 5,00,000
sales
To gross 1,60,000 1,50,000
profit b/d
4,00,000 5,00,000 4,00,000 5,00,000
To operating By gross 1,60,000 1,50,000
expenses: profit b/d
To 25,000 30,000
administration
To selling 15,000 20,000 By interest 20,000 50,000
on
investment
To 10,000 10,000
distribution
To non
operating
expenses:
To finance 20,000 20,000
expenses
To goodwill 10,000 Nil
written off
To net profit 1,00,000 1,20,000
1,80,000 2,00,000 1,80,000 2,00,000

6. From the following information of Axis co Ltd for the year ended 2010 and 2011.
Prepare common size income statement for the two years.

Particulars 2010 (Rs) 2011 (Rs) Particulars 2010 (Rs) 2011 (Rs)
To cost of 24,000 35,000 By sales 40,000 50,000
sales
To gross 16,000 15,000
profit b/d
40,000 50,000 40,000 50,000
To operating
expenses:
To 2,500 3,000 By gross 16,000 15,000
administration profit b/d
To selling 1,500 2,000 By interest 2,000 5,000
on
investment
To 1,000 1,000
distribution
To non
operating
expenses:
To finance 2,000 2,000
expenses
To goodwill 1,000 Nil
written off
To net profit 10,000 12,000
18,000 20,000 18,000 20,000

7. Ampro Ltd furnishes the following balance sheet for the year ended 2009 and 2010.
Prepare common size balance sheet.

Liabilities 2009 (Rs) 2010 (Rs) Assets 2009 (Rs) 2010 (Rs)
Share 2,00,000 3,00,000 Buildings 4,00,000 4,00,000
capital
Reserves 6,00,000 7,00,000 Machinery 6,00,000 10,00,000
9% 2,00,000 3,00,000 Stock 2,00,000 3,00,000
debentures
Creditors 3,00,000 5,00,000 Debtors 2,00,000 2,50,000
Bills payable 1,00,000 80,000 Cash in 1,00,000 50,000
hand
Tax payable 1,00,000 1,20,000
15,00,000 20,00,000 15,00,000 20,00,000

8. Onida Co.Ltd furnishes the following balance sheets for the year ended 2004 and
2005. Prepare common size balance sheet.

Liabilities 2009 (Rs) 2010 (Rs) Assets 2009 (Rs) 2010 (Rs)
Share 4,00,000 6,00,000 Buildings 8,00,000 8,00,000
capital
Reserves 12,00,000 14,00,000 Machinery 12,00,000 20,00,000
9% 4,00,000 6,00,000 Stock 4,00,000 6,00,000
debentures
Creditors 6,00,000 10,00,000 Debtors 4,00,000 5,00,000
Bills payable 2,00,000 1,60,000 Cash in 2,00,000 1,00,000
hand
Tax payable 2,00,000 2,40,000
30,00,000 40,00,000 30,00,000 40,00,000

9. From the following data compute trend percentage taking 2011 as base:

Year Sales (in Rs) Closing stock (in Rs) Profit before tax (in Rs)
2011 2,58,680 1,20,580 55,750
2012 3,53,460 1,25,760 63,520
2013 3,68,550 1,32,540 65,120
2014 4,12,430 1,34,780 72,460
2015 4,87,560 1,45,730 87,290

10. From the following, interpret the results of operations of manufacturing concern
using trend analysis:

Details 2007 2008 2009 2010

Sales (Net) 100 90 120 150
Less: Cost of goods sold 60 60 70 80
Gross profit 40 30 50 70
Less: Operating expense 10 10 15 20
Operating profit 30 20 35 50
Less: Taxes 15 10 17.5 25
Profit after tax 15 10 17.5 25