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NCERT solutions for Class 12 Accountancy chapter 5 - Accounting Ratios

Ncert Class 12 Accountancy - Company Accounts and Analysis of Financial Statements

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NCERT Ncert Class 12 Accountancy - Company Accounts and Analysis of Financial Statements

Ncert Class 12 Accountancy - Company Accounts and Analysis of Financial Statements - Shaalaa.com

Chapter 5: Accounting Ratios

Short Answer QuestionsLong Answer QuestionsNumerical Questions

Chapter 5: Accounting Ratios Exercise Short Answer Questions solutions [Page 228]

Short Answer Questions | Q 1 | Page 228

Short Answer Question

What do you mean by Ratio Analysis?

Short Answer Questions | Q 2 | Page 228

Short Answer Question

What are the various types of ratios?

Short Answer Questions | Q 3 | Page 228

Short Answer Question

What relationships will be established to study:

a. Inventory Turnover

b. Trade Receivables Turnover

c. Trade Payables Turnover

d. Working Capital Turnover

Short Answer Questions | Q 4 | Page 228

Short Answer Question

The liquidity of a business firm is measured by its ability to satisfy its long-term obligations as they become due. What are the ratios used for this purpose?

Short Answer Questions | Q 5 | Page 228

Short Answer Question

The average age of inventory is viewed as the average length of time inventory is held by the firm for which explain with reasons.

Chapter 5: Accounting Ratios Exercise Long Answer Questions solutions [Page 228]

Long Answer Questions | Q 1 | Page 228

Long Answer Question

What are liquidity ratios? Discuss the importance of current and liquid ratio.

Long Answer Questions | Q 2 | Page 228

Long Answer Question

How would you study the solvency position of the firm?

Long Answer Questions | Q 3 | Page 228

Long Answer Question

What are important profitability ratios? How are these worked out?

Long Answer Questions | Q 4 | Page 228

The current ratio provides a better measure of overall liquidity only when a firm’s inventory cannot easily be converted into cash. If inventory is liquid, the quick ratio is a preferred measure of overall liquidity. Explain.

Chapter 5: Accounting Ratios Exercise Numerical Questions solutions [Pages 228 - 234]

Numerical Questions | Q 1 | Page 228

Following is the Balance Sheet of Raj Oil Mills Limited as at March 31, 2017. Calculate Current Ratio.

Particulars (Rs)
I. Equity and Liabilities:  

1. Shareholders’ funds

 

a) Share capital

7,90,000

b) Reserves and surplus

35,000

2. Current Liabilities

 

a) Trade Payables

72,000
Total 8,97,000
II. Assets  

1. Non-current Assets

 

a) Fixed assets

 

Tangible assets

7,53,000

2. Current Assets

 

a) Inventories

55,800

b) Trade Receivables

28,800

c) Cash and cash equivalents

59,400
Total 8,97,000
Numerical Questions | Q 2 | Page 229

Following is the Balance Sheet of Title Machine Ltd. as at March 31, 2017. 

Particulars  

Amount

Rs. 

I. Equity and Liabilities    

1. Shareholders’ funds  

 

a) Share capital

24,00,000

b) Reserves and surplus

6,00,000

2. Non-current liabilities  

 

a) Long-term borrowings

9,00,000

3. Current liabilities

 

a) Short-term borrowings  

6,00,000

b) Trade payables

23,40,000

c) Short-term provisions  

60,000
Total 69,00,000
II. Assets  

1. Non-current Assets  

 

a) Fixed assets

 

Tangible assets

45,00,000

2. Current Assets

 

a) Inventories

12,00,000

b) Trade receivables

9,00,000

c) Cash and cash equivalents

2,28,000

d) Short-term loans and advances

72,000
Total 69,00,000

Calculate Current Ratio and Liquid Ratio.

Numerical Questions | Q 3 | Page 229

Current Ratio is 3.5:1. Working Capital is Rs 90,000. Calculate the amount of Current Assets and Current Liabilities.

Numerical Questions | Q 4 | Page 229

Shine Limited has a current ratio 4.5:1 and quick ratio 3:1; if the inventory is 36,000, calculate current liabilities and current assets.

Numerical Questions | Q 5 | Page 229

Current liabilities of a company are Rs 75,000. If current ratio is 4:1 and liquid ratio is 1:1, calculate value of current assets, liquid assets and inventory.

Numerical Questions | Q 6 | Page 230

Handa Ltd.has inventory of Rs 20,000. Total liquid assets are Rs 1,00,000 and quick ratio is 2:1. Calculate current ratio.

Numerical Questions | Q 7 | Page 230

Calculate debt equity ratio from the following information:

 

 

Rs

Total Assets

15,00,000

Current Liabilities

6,00,000

Total Debts

12,00,000

 

 

Numerical Questions | Q 8 | Page 230

Calculate Current Ratio if:

Inventory is Rs 6,00,000; Liquid Assets Rs 24,00,000; Quick Ratio 2:1.

Numerical Questions | Q 9 | Page 230

Compute Stock Turnover Ratio from the following information:

 

 

Rs

Net Revenue from Operations

2,00,000

Gross Profit

50,000

Inventory at the end

60,000

Excess of inventory at the end over inventory in the beginning

20,000

Numerical Questions | Q 10 | Page 230

Calculate following ratios from the following information:

(i) Current ratio (ii) Acid test ratio (iii) Operating Ratio (iv) Gross Profit Ratio

 

 

Rs

Current Assets

35,000

Current Liabilities

17,500

Inventory

15,000

Operating Expenses

20,000

Revenue from Operations

60,000

Cost of Goods Sold

30,000

 

Numerical Questions | Q 11 | Page 230

From the following information calculate:

(i) Gross Profit Ratio (ii) Inventory Turnover Ratio (iii) Current Ratio (iv) Liquid Ratio (v) Net Profit Ratio (vi) Working capital Ratio:

 

 

Rs

Revenue from Operations

25,20,000

Net Profit

3,60,000

Cast of Revenue from Operations

19,20,000

Long-term Debts

9,00,000

Trade Payables

2,00,000

Average Inventory

8,00,000

Current Assets

7,60,000

Fixed Assets

14,40,000

Current Liabilities

6,00,000

Net Profit before Interest and Tax

8,00,000

 

Numerical Questions | Q 12 | Page 231

Compute Gross Profit Ratio, Working Capital Turnover Ratio, Debt Equity Ratio and Proprietary Ratio from the following information:

 

 

Rs

Paid-up Share Capital

5,00,000

Current Assets

4,00,000

Revenue from Operations

10,00,000

13% Debentures

2,00,000

Current Liabilities

2,80,000

Cost of Revenue from Operations

6,00,000

 

Numerical Questions | Q 13 | Page 231

Calculate Inventory Turnover Ratio if:

Inventory in the beginning is Rs. 76,250, Inventory at the end is 98,500, Gross Revenue from Operations is Rs. 5,20,000, Sales Return is Rs. 20,000, Purchases is Rs. 3,22,250.

Numerical Questions | Q 14 | Page 231

Calculate Inventory Turnover Ratio from the data given below:

 

 

Rs

Inventory in the beginning of the year

10,000

Inventory at the end of the year

5,000

Carriage

2,500

Revenue from Operations

50,000

Purchases

25,000

Numerical Questions | Q 15 | Page 231

A trading firm’s average inventory is Rs 20,000 (cost). If the inventory turnover ratio is 8 times and the firm sells goods at a profit of 20% on sale, ascertain the profit of the firm.

Numerical Questions | Q 16 | Page 231

You are able to collect the following information about a company for two years:

 

 

 

2015-16

 

2016-17

Trade receivables on Apr. 01

 Rs.

4,00,000

 Rs

5,00,000

Trade receivables on Mar. 31

 

 

Rs

5,60,000

Stock in trade on Mar. 31

Rs.

6,00,000

Rs

9,00,000

Revenue from operations (at gross profit of 25%)

Rs.

3,00,000

Rs

 24,00,000

Calculate Inventory Turnover Ratio and Trade Receivables Turnover Ratio.

Numerical Questions | Q 17 | Page 232

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

Numerical Questions | Q 18 | Page 232

From the following information, calculate the following ratios:
i) Quick Ratio
ii) Inventory Turnover Ratio
iii) Return on Investment

  Rs.
Inventory in the beginning 50,000
Inventory at the end 60,000
Revenue from operations 4,00,000
Gross Profit 1,94,000
Cash and Cash Equivalents 40,000
Trade Receivables 1,00,000
Trade Payables 1,90,000
Other Current Liabilities 70,000
Share Capital 2,00,000
Reserves and Surplus 1,40,000

(Balance in the Statement of Profit & Loss A/c)

Numerical Questions | Q 19 | Page 233

From the following, calculate (a) Debt Equity Ratio (b) Total Assets to Debt Ratio (c) Proprietary Ratio.

  Rs.
Equity Share Capital 75,000
Preference Share Capital 25,000
General Reserve 45,000
Balance in the Statement of Profits and Loss 30,000
Debentures 75,000
Trade Payables 40,000
Outstanding Expenses 10,000
Numerical Questions | Q 20 | Page 233

Cost of Revenue from Operations is Rs 1,50,000. Operating expenses are Rs 60,000. Revenue from Operations is Rs 2,50,000. Calculate Operating Ratio.

Numerical Questions | Q 21 | Page 233

Calculate the following ratio on the basis of following information:
(i) Gross Profit Ratio (ii) Current Ratio (iii) Acid Test Ratio (iv) Inventory Turnover Ratio (v) Fixed Assets Turnover Ratio

  Rs.
Gross Profit 50,000
Revenue from Operations 100,000
Inventory 15,000
Trade Receivables 27,500
Cash and Cash Equivalents 17,500
Current Liabilities 40,000
Land & Building 50,000
Plant & Machinery 30,000
Furniture 20,000
Numerical Questions | Q 22 | Page 234

From the following information calculate Gross Profit Ratio, Inventory Turnover Ratio and Trade Receivables Turnover Ratio.

  Rs
Revenue from Operations 3,00,000
Cost of Revenue from Operations 2,40,000
Inventory at the end 62,000
Gross Profit 60,000
Inventory in the beginning 58,000
Trade Receivables 32,000

Chapter 5: Accounting Ratios

Short Answer QuestionsLong Answer QuestionsNumerical Questions

NCERT Ncert Class 12 Accountancy - Company Accounts and Analysis of Financial Statements

Ncert Class 12 Accountancy - Company Accounts and Analysis of Financial Statements - Shaalaa.com

Textbook solutions for Class 12






















NCERT solutions for Class 12 Accountancy chapter 5 - Accounting Ratios

NCERT solutions for Class 12 Accountancy chapter 5 (Accounting Ratios) include all questions with solution and detail explanation. This will clear students doubts about any question and improve application skills while preparing for board exams. The detailed, step-by-step solutions will help you understand the concepts better and clear your confusions, if any. Shaalaa.com has the CBSE Ncert Class 12 Accountancy - Company Accounts and Analysis of Financial Statements solutions in a manner that help students grasp basic concepts better and faster.

Further, we at Shaalaa.com provide such solutions so that students can prepare for written exams. NCERT textbook solutions can be a core help for self-study and acts as a perfect self-help guidance for students.

Concepts covered in Class 12 Accountancy chapter 5 Accounting Ratios are Types of Ratios, Limitations of Ratio Analysis, Advantages of Ratio Analysis, Objectives of Ratio Analysis, Concept of Accounting Ratios.

Using NCERT Class 12 solutions Accounting Ratios exercise by students are an easy way to prepare for the exams, as they involve solutions arranged chapter-wise also page wise. The questions involved in NCERT Solutions are important questions that can be asked in the final exam. Maximum students of CBSE Class 12 prefer NCERT Textbook Solutions to score more in exam.

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