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Accounting Ratios
The motto of Yash Ltd., an advertising company is 'Service with Dignity'. Its management and work force is hard-working, honest and motivated. The net profit of the company doubled during the year ended 31-3-2014. Encouraged by its performance company decided to give one-month extra salary to all its employees. Following is the Comparative Statement of Profit and Loss of the company for the years ended 31st March 2013 and 2014. 
(a) Calculate Net Profit Ratio for the years ending 31st March, 2013 and 2014.
(b) Identify any two values which Yash Ltd. is trying to propagate.
31/ March/ 2013:
Net Profit Ratio = ( Net profit after tax/ revenue from operations)*100
= (3,00,000/10,00,000)*100 = 30%
31/ March/2014:
Net Profit Ratio = (Net Profit after tax/ Revenue from operations)*100
= (6,00,000/ 15,00,000)* 100 = 40%
Values of Yash Ltd:
(i) Focus on consideration and welfare of employees.
(ii) Motivating and boosting the morale of employees form better performance.
Some More Questions From Accounting Ratios Chapter
Compute Working Capital Turnover Ratio using the following information:
Particulars
Amount (Rs)
Cash Sales
1,30,000
Credit Sales
3,80,000
Sales Returns
10,000
Liquid Assets
1,40,000
Current Liabilities
1,05,000
Inventory
90,000
Compute Debt Equity Ratio using the following information:
Particulars
Amount (RS.)
Total Assets
3,50,000
Total Debts
2,50,000
Current Liabilities
80,000
O.M. Ltd has a Current Ratio of 3.5:1 and Quick Ratio of 2:1. If the excess of Current Assets over Quick Assets as represented by Stock is Rs 1,50,000, calculate Current Assets and Current Liabilities.
From the following information, calculate any two of the following ratios:
(a) Debt-Equity Ratio
(b) Working Capital Turnover Ration and
(c) Return on Investment
Information: Equity Share capital Rs 50,000, General Reserve Rs 5,000; Profit and Loss
Account after tax and interest Rs 15,000; 9% Debenture Rs 20,000; Creditors Rs 15,000; Land and Building Rs 65,000; Equipment Rs 15,000; Debtors Rs 14,500 and Cash Rs 5,500. Discount on issue of shares Rs 5,000
Sales for the year ended 31-3-2011 was Rs 1,50,000. Tax rate 50%.
(a) Debt-Equity Ratio
(b) Working Capital Turnover Ration and
(c) Return on Investment
Information: Equity Share capital Rs 50,000, General Reserve Rs 5,000; Profit and Loss
Account after tax and interest Rs 15,000; 9% Debenture Rs 20,000; Creditors Rs 15,000; Land and Building Rs 65,000; Equipment Rs 15,000; Debtors Rs 14,500 and Cash Rs 5,500. Discount on issue of shares Rs 5,000
Sales for the year ended 31-3-2011 was Rs 1,50,000. Tax rate 50%.
On the basis of the following information, calculate:
(i) Debt-Equity Ratio and
(ii) Working Capital Turnover Ratio
Information: Rs.
Net Sales 60,00,000
Cost of goods sold 45,00,000
Other current assets 11,00,000
Current liabilities 4,00,000
Paid up share capital 6,00,000
6% Debentures 3,00,000
9% Loan 1,00,000
Debenture Redemption Reserve 2,00,000
Closing Stock 1,00,000
From the following Balance Sheets of Vijaya Ltd. as on 31-3-2009 and 31-3-2010 prepare a Cash Flow Statement.
Liabilities
31-3-2009
(Rs)
31-3-2010
(Rs)
Assets
31-3-2009
(Rs)
31-3-2010
(Rs)
Share Capital
General Reserve
Profit & loss account
Trade Creditors
45,000
15,000
10,000
8,700
65,000
27,500
15,000
11,000
Fixed Assets
Stock
Debtors
Cash
Preliminary expense
46,700
11,000
18,000
2,000
1,000
83,000
13,000
19,500
2,500
500
78,700
1,18,500
78,700
1,18,500
Additional Information:
(i) Depreciation on Fixed Assets for the year 2009-2010 was Rs. 14,700.
(ii) An interim dividend Rs. 7,000 has been paid to the shareholders during the year.
Liabilities
31-3-2009
(Rs)
31-3-2010
(Rs)
Assets
31-3-2009
(Rs)
31-3-2010
(Rs)
Share Capital
General Reserve
Profit & loss account
Trade Creditors
45,000
15,000
10,000
8,700
65,000
27,500
15,000
11,000
Fixed Assets
Stock
Debtors
Cash
Preliminary expense
46,700
11,000
18,000
2,000
1,000
83,000
13,000
19,500
2,500
500
78,700
1,18,500
78,700
1,18,500
(i) Depreciation on Fixed Assets for the year 2009-2010 was Rs. 14,700.
(ii) An interim dividend Rs. 7,000 has been paid to the shareholders during the year.
What is meant by solvency of business?
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