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# From the Following Balance Sheet and Other Information, Calculate Following Ratios: (I) Debt-equity Ratio (Ii) Working Capital Turnover Ratio (Iii) Trade Receivables Turnover Ratio - Accountancy

ConceptTypes of Ratios

#### Question

From the following Balance Sheet and other information, calculate following ratios: (i) Debt-Equity Ratio (ii) Working Capital Turnover Ratio (iii) Trade Receivables Turnover Ratio

Balance Sheet as at March 31, 2017

 Particulars Note No. Rs. I. Equity and Liabilities: 1. Shareholders’ funds a) Share capital 10,00,000 b) Reserves and surplus 9,00,000 2. Non-current Liabilities Long-term borrowings 12,00,000 3. Current Liabilities Trade payables 5,00,000 Total 36,00,000 II. Assets 1. Non-current Assets a) Fixed assets Tangible assets 18,00,000 2. Current Assets a) Inventories 4,00,000 b) Trade Receivables 9,00,000 c) Cash and cash equivalents 5,00,000 Total 36,00,000

Additional Information: Revenue from Operations Rs. 18,00,000

#### Solution

1) Debt-Equity Ratio
Debt Equity Ratio = "Debt"/"Equity"
="12,00,000"/"19,00,000"
= 0.63 : 1

Debt = Long Term Borrowings = Rs 12,00,0000
Equity = Share Capital + Reserve and Surplus
= 10,00,000 + 9,00,000
= Rs 19,00,000

2. Working Capital Turnover Ratio
Working Capital Turnover Ratio = "Ravenue From Operation"/"Working Capital"
= "18,00,000"/"13,00,000"
= 1.39 times

Revenue from Operations = Rs 18, 00,000
Working Capital = Current Assets – Current Liabilities
= 18,00,000 – 5,00,000
= Rs 13,00,000

Trade Receivables Turnover Ratio = "Net Credit Sales"/"Average Trade Receivables"

= [18,00,000]/[9,00,000]

= 2 times

Net Credit Sales = Rs 18,00,000
Average Trade Receivables = Rs 9,00,000
Notes:
1. Revenue from Operations are assumed to be revenue generated from credit sales.
2. The amount of trade receivables given in the Balance Sheet is assumed to be Average Trade Receivables.

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Solution From the Following Balance Sheet and Other Information, Calculate Following Ratios: (I) Debt-equity Ratio (Ii) Working Capital Turnover Ratio (Iii) Trade Receivables Turnover Ratio Concept: Types of Ratios.
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