The proprietary ratio of M Ltd. is 0.80:1 State with reasons whether the following transactions will increase, decrease or not change the proprietary ratio:
(i)   Obtained a loan from bank ₹ 2,00,000 payable after five years.
(ii)  Purchased machinery for cash ₹ 75,000
(iii)  Redeemed 5% redeemable preference shares ₹ 1,00,000
Issued Equity shares to the vendors of machinery purchased for ₹ 4,00,000.

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%.

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.

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.

What is meant by solvency of business?