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# NCERT solutions for Class 12 Accountancy - Company Accounts and Analysis of Financial Statements chapter 5 - Accounting Ratios [Latest edition]

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## Chapter 5: Accounting Ratios

#### NCERT solutions for Class 12 Accountancy - Company Accounts and Analysis of Financial Statements Chapter 5 Accounting Ratios Exercise Short Answer Questions [Page 228]

Short Answer Questions | Q 1 | Page 228

What do you mean by Ratio Analysis?

Short Answer Questions | Q 2 | Page 228

What are the various types of ratios?

Short Answer Questions | Q 3 | Page 228

What relationships will be established to study:

a. Inventory Turnover

d. Working Capital Turnover

Short Answer Questions | Q 4 | Page 228

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

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

#### NCERT solutions for Class 12 Accountancy - Company Accounts and Analysis of Financial Statements Chapter 5 Accounting Ratios Exercise Long Answer Questions [Page 228]

Long Answer Questions | Q 1 | Page 228

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

Long Answer Questions | Q 2 | Page 228

How would you study the solvency position of the firm?

Long Answer Questions | Q 3 | Page 228

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.

#### NCERT solutions for Class 12 Accountancy - Company Accounts and Analysis of Financial Statements Chapter 5 Accounting Ratios Exercise Numerical Questions [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

## NCERT solutions for Class 12 Accountancy - Company Accounts and Analysis of Financial Statements chapter 5 - Accounting Ratios

NCERT solutions for Class 12 Accountancy - Company Accounts and Analysis of Financial Statements 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 Class 12 Accountancy - Company Accounts and Analysis of Financial Statements solutions in a manner that help students grasp basic concepts better and faster.

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Concepts covered in Class 12 Accountancy - Company Accounts and Analysis of Financial Statements chapter 5 Accounting Ratios are Concept of Accounting Ratios, Objectives of Ratio Analysis, Advantages of Ratio Analysis, Limitations of Ratio Analysis, Types of 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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