Out of current assets it is believed that stock, and prepaid expenses are not possible to convert in cash quickly. Question 3. Current Ratio 4; Liquid Ratio 2.5; Inventory  ₹  6,00,000. Calculate Cost of Revenue from Operations (Cost of Goods Sold). Calculate Total Assets to Debt Ratio. Case 2: Revenue from Operations (Net Sales) ₹30,00,000; Cash Revenue from Operations, i.e., Cash Sales ₹6,00,000; Opening Trade Receivables ₹2,00,000; Closing Trade Receivables ₹6,00,000. Calculate Return on Investment (ROI) from the following details: Net Profit after Tax ₹ 6,50,000; Rate of Income Tax 50%; 10% Debentures of ₹ 100 each ₹ 10,00,000; Fixed Assets at cost ₹ 22,50,000; Accumulated Depreciation on Fixed Assets up to date ₹ 2,50,000; Current Assets ₹ 12,00,000; Current Liabilities ₹ 4,00,000. Answer This is very much true that the financial ratio analysis is conducted by four groups of analysts : managers, equity investors, long term creditors and short term creditors. (i) Traditional Classification: Traditional ratios are those accounting ratios which are based on the Financial Statement like Trading and Profit and Loss Account and Balance Sheet. Total Debt ₹15,00,000; Current Liablities ₹5,00,000; Capital Employed ₹15,00,000. It means a ratio 2 : 1 is considered favourable. The following formula is used to calculate the creditors Turnover Ratio, (d)Working Capital Turnover Ratio Working capital turnover ratio indicates the velocity of the utilization of net working capital. Work out Current Ratio. In the case of manufacturing concern, it would be equal to the sum of the cost of raw materials, wages, direct expenses and all manufacturing expenses. Get the free view of chapter 3 Accounting Ratios Class 12 extra questions for Class 12 Accountancy - Analysis of Financial Statements and can use Shaalaa.com to keep it handy for your exam preparation. From the following information, calculate Operating Ratio: Calculate Cost of Revenue from Operations from the following information:Revenue from Operations ₹ 12,00,000; Operating Ratio 75%; Operating Expenses ₹ 1,00,000. (e) Bills Payable discharged. Question 11. You are required to calculate Return on Investment for the year 2018-19 with reference to Opening Capital Employed. Double Entry Book Keeping- TS Grewal Vol. Chapter 4 Accounting Ratios. The two basic components of the net profit ratio are the net profit and sales. Calculate the amount of Current Assets and Current Liabilities. Gopal Ltd. was registered with an authorised capital of Rs.50,00,000 divided into Equity Shares of Rs.10 each. Calculate Current Ratio. ₹ 3,00,000 is the Cost of Revenue from Operations (Cost of Goods Sold). The current ratio ‘explains the relationship between current assets and current liabilities. These solutions for class 12 are outlined keeping in mind the latest CBSE syllabus, hence possessing a big chance of appearing in the board exams. A high Interest Coverage Ratio implies that the company can easily meet all its interest obligations out of its profit. Calculate debt equity ratio from the following information. I 2019 Solutions for class 12 . Sometimes quick ratio is calculated on the basis of quick liability instead of current liabilities. 24,00,000; Quick Ratio 2:1. In this way net profit ratio will not tell the truth about the profit of the organisation. Note (i) Acid test ratio, quick ratio and liquid ratio are one and the same. A company had Current Assets of ₹4,50,000 and Current Liabilities of ₹2,00,000. Current ratio =4.5:1,quick ratio =3:1, Inventory is Rs.36,000. Calculate Trade Receivables Turnover Ratio. CBSE Sample Papers For Class 12, NCERT SolutionsAccountancyBusiness StudiesMacro EconomicsCommerce, Filed Under: CBSE Tagged With: Accountancy Class 12 NCERT Answers, Accountancy Class 12 NCERT Solutions Free, NCERT Book Solutions for Class 12, NCERT Solutions, NCERT Solutions Class 12 Accountancy, NCERT Solutions for Class 12, NCERT Solutions for Class 12 Accountancy, NCERT TextBooks Solutions, RD Sharma Class 11 Solutions Free PDF Download, NCERT Solutions for Class 12 Computer Science (Python), NCERT Solutions for Class 12 Computer Science (C++), NCERT Solutions for Class 12 Business Studies, NCERT Solutions for Class 12 Micro Economics, NCERT Solutions for Class 12 Macro Economics, NCERT Solutions for Class 12 Entrepreneurship, NCERT Solutions for Class 12 Political Science, NCERT Solutions for Class 11 Computer Science (Python), NCERT Solutions for Class 11 Business Studies, NCERT Solutions for Class 11 Entrepreneurship, NCERT Solutions for Class 11 Political Science, NCERT Solutions for Class 11 Indian Economic Development, NCERT Solutions for Class 10 Social Science, NCERT Solutions For Class 10 Hindi Sanchayan, NCERT Solutions For Class 10 Hindi Sparsh, NCERT Solutions For Class 10 Hindi Kshitiz, NCERT Solutions For Class 10 Hindi Kritika, NCERT Solutions for Class 10 Foundation of Information Technology, NCERT Solutions for Class 9 Social Science, NCERT Solutions for Class 9 Foundation of IT, PS Verma and VK Agarwal Biology Class 9 Solutions, NCERT Solutions for Class 12th English Flamingo, NCERT Solutions for Class 12th English Vistas, Accountancy Class 12 NCERT Solutions Free, NCERT Solutions for Class 10 Science Chapter 1, NCERT Solutions for Class 10 Science Chapter 2, Periodic Classification of Elements Class 10, NCERT Solutions for Class 10 Science Chapter 7, NCERT Solutions for Class 10 Science Chapter 8, NCERT Solutions for Class 10 Science Chapter 9, NCERT Solutions for Class 10 Science Chapter 10, NCERT Solutions for Class 10 Science Chapter 11, NCERT Solutions for Class 10 Science Chapter 12, NCERT Solutions for Class 10 Science Chapter 13, NCERT Solutions for Class 10 Science Chapter 14, NCERT Solutions for Class 10 Science Chapter 15, NCERT Solutions for Class 10 Science Chapter 16, CBSE Previous Year Question Papers Class 12, CBSE Previous Year Question Papers Class 10. 1,00,000 and quick ratio is 2:1 Calculate current ratio. Solved Cbse Class 12 Accountancy Full Project(Comprehensive Project, Ratio Analysis and Cash Flow Statements with Conclusion) 2,065,308 views. Solvency of a concern can be measured in two ways first to check the security of Debt and second is to check the security of return on Debt. Note :In this question current assetts should be considered as other current asset and stock is separate, in other words, other current assets means liquid assets. Calculate Trade Receivables Turnover Ratio. Find the value of the stock. NCERT solutions Class 12 Accountancy Part 2 Chapter 5 deals with users of a financial ratio, current and liquidity ratio, solvency position of the firm, important profitability ratios, managers, investors, long term creditors, solving balance sheets, proprietary ratio, and much more related to company accounts. (c) Activity Ratio :These ratios are calculated for measuring the operational efficiency and efficacy of the operations. Reliability of Ratios: Since, ratios are calculated based on the financial information, if the information available is not correct ratios calculated using such information will also be incorrect. cannot be easily sold off. 80,000 State with reason whether the following transactions will increase, decrease or not change the 'Return on Investment' Ratio:(i) Purchase of machinery worth ₹10,00,000 by issue of equity shares. Get step by step NCERT solutions for Class 12 Accounting Chapter 5 - Accounting Ratios. Question 19. Chapter 1: Financial Statements of a Company, Chapter 2: Tools of Financial Statement Analysis-Comparative Statements and Common-Size Statements, Class 12 Accountancy - Analysis of Financial Statements, CBSE Previous Year Question Paper With Solution for Class 12 Arts, CBSE Previous Year Question Paper With Solution for Class 12 Commerce, CBSE Previous Year Question Paper With Solution for Class 12 Science, CBSE Previous Year Question Paper With Solution for Class 10, Maharashtra State Board Previous Year Question Paper With Solution for Class 12 Arts, Maharashtra State Board Previous Year Question Paper With Solution for Class 12 Commerce, Maharashtra State Board Previous Year Question Paper With Solution for Class 12 Science, Maharashtra State Board Previous Year Question Paper With Solution for Class 10, CISCE ICSE / ISC Board Previous Year Question Paper With Solution for Class 12 Arts, CISCE ICSE / ISC Board Previous Year Question Paper With Solution for Class 12 Commerce, CISCE ICSE / ISC Board Previous Year Question Paper With Solution for Class 12 Science, CISCE ICSE / ISC Board Previous Year Question Paper With Solution for Class 10, 10,000 Equity Shares of ₹ 10 each fully paid, 5,000; 9% Preference Shares of ₹ 10 each fully paid, Surplus, i.e., Balance in Statement of Profit and Loss, Cost of Revenue from Operations (Cost of Goods Sold), ₹ 4,80,000 (including Cash Sales ₹ 1,20,000), ₹ 3,60,000 (including Credit Purchases ₹ 2,39,200), Credit Revenue from Operations, i.e., Net Credit Sales for the year, Credit Revenue from Operations (Credit Sales), Revenue From Operations, i.e., Net Sales Gross Profit, Cost of Goods Sold or Cost of Revenue from Operations. These ratios reveal the current financial position of the business. Calculate Working Capital Turnover Ratio. Capital Employed ₹ 12,00,000; Net Fixed Assets 8,00,000; Cost of Goods Sold or Cost of Revenue from Operations ₹ 40,00,000; Gross Profit is 20% on Cost. Question 17. (ii) Purchased machinery of ₹ 2,00,000 by cheque. Solved Accounting Ratios with Balance Sheet(vertical) and Statement of Profit and Loss - Cbse Class 12 Accountancy Project 5,00,000. (iv) Short Term Creditors :Short term creditors are those creditors who provide financial assistance through short term credit (Generally less than one year). Circulate Current Ratio. Accounts payable include both sundry creditors and bills payable. Calculate Current Ratio after the purchase. The solutions not only explain the exercise questions but also the unit-wise and page-wise questions. From the following, (c) Composite Ratios :like Debtors Turnover Ratio, etc. Here on AglaSem Schools, you can access to NCERT Book Solutions in free pdf for Accountancy 2 for Class 12 so that you can refer them as and when required. In other words, generally the expenses charged to profit and loss account or operating expenses are excluded from the calculation of cost of goods sold. Current Assets = Stock + Cash + … This ratio represents the number of times the working capital is turned over in a year and is calculated as follows. That’s why short-term creditors are interested in timely payment of their debts in short run. Some of the most Important and popular profitability ratios are as under Calculate Here is a compilation of top thirteen accounting problems on ratio analysis with its relevant solutions. Answer Inventory Turnover Ratio This ratio is a relationship between the cost of goods sold during a particular period of time and the cost of average inventory during a particular period. This ratio indicates whether investment in stock is within proper limit or not. Total Liquid Assts are ₹12,00,000 and Quick Ratio is 2:1. (e) Purchase of Stock-in-Trade on credit. Question 2. (d) liquid ratio, inventory Provision for Doubtful Debts ₹ 20,000. A firm normally has trade Receivables equal to two months' credit Sales. This is closely related to the ratio of operating profit to net sales. Closing Trade Receivables ₹ 1,00,000; Cash Sales being 25% of Credit Sales; Excess of Closing Trade Receivables over Opening Trade Receivables ₹ 40,000; Revenue from Operations, i.e., Net Sales ₹ 6,00,000. y Ltd.'s profit after interest and tax was ₹ 1,00,000. The accountant of the firm is interested in maintaing a Current Ratio of 2:1 by paying off a part of the Current Liabilities. The significance of ratios to the above mentioned users is as follows NCERT Solution for Class 12 Accountancy Chapter 5 - Accounting Ratios d. Working Capital Turnover Ratio: Working capital turnover ratio is used to measure the efficiency of a company in using its working capital to support the sales. 2. Question 9. It is always observed that short term obligations are paid through current assest. Accounting Ratios Class 12 DK Goel Solutions: An Outline of Chapter 5. That’s why short term creditors are interested in timely payment of their debts in short run. Answer Financial ratios help their users to take various managerial decisions. Shareholder’s funds include equity share capital plus all reserves and surpluses items. If Current ratio is 4 : 1 and liquid ratio is 1:1, calculate value of current assets, liquid assets and stock. Accounting ratios are widely used for such comparisons. For measuring the long term solvency of any business we calculate the following ratios. Question 7. TS Grewal Solutions for Class 12 Accountancy – Company Account – Accounting for Share Capital (Volume II) Question 1. It is expressed in number of times. Calculate Gross Profit Ratio. (i) Sale of FIxed Assets (Book Value of ₹50,000) for ₹60,000. (iii) Opening Inventory ₹1,00,000; Closing Inventory ₹60,000; Inventory Turnover Ratio 8 Times; Selling Price 25% above cost. Calculate Inventory Turnover Ratio from the following information: Opening Inventory is ₹50,000; Purchases ₹3,90,000; Revenue from Operations, i.e., Net Sales ₹6,00,000; Gross Profit Ratio 30%. All the solutions of Accounting Ratios - Accountancy explained in detail by … Financial ratio analysis are conducted by four groups of analysts : managers, equity investors, long term creditors and short term creditors. 90,000. Statement Analysis Tools and Accounting Ratios Class 12 Accountancy Extra Questions. DK Goel Solutions Class 12 Vol 2 Chapter 5 Accounting Ratios is considered to be the most helpful study material for the students pursuing their class 12. I 2019 Solutions for Class 12 Accountancy Chapter 2 - Accounting for Partnership Firms-Fundamentals Revenue from Operations, i.e., Net Sales ₹ 6,00,000. Xolo Ltd.'s Liquidity Ratio is 2.5 : 1. Proprietory/Equity Ratio indicates the long-term or future solvency position of the business. Chapter 5 Accounting Ratios. Accounting Ratios – CBSE Notes for Class 12 Accountancy Topic 1: Introduction 1. Formula of Proprietary/Equity Ratio This will clear students doubts about any question and improve application skills while preparing for board exams. (i) The following groups of ratios primarily measure risk Answer (a) Inventory Turnover Ratio: This ratio is a relationship between the cost of goods sold during a particular period of time and the cost of average inventory during a particular period. Current Ratio/Working Capital Ratio: This ratio establish relationship between current assets and current liabilities. Calculate individual partner’s gain or sacrifice due to change in ratio. Calculate the amount of gross profit It expresses the relationship between gross profit and sales. Here the long term obligation means payments of principal amount on the due date and payments of interests on the regular basis. From the following information, calculate Total Assets to Debt Ratio: From the following information, calculate Proprietary Ratio: From the following infromation, calculate Proprietary Ratio: Calculate Proprietary Ratio from the following: (c) Short-term Provisions (Provision for Tax). Answer True, (f) One ratios reflect both quantitative and qualitative aspects. We hope the TS Grewal Accountancy Class 12 Solutions Chapter 1 Accounting for Partnership Firms – Fundamentals help you. State with reason, whether the following transactions will increase, decrease or not change the Quick Ratio:(i) Purchase of loose tools for ₹2,000; (ii) Insurance premium paid in advance ₹500; (iii) Sale of goods on credit ₹3,000; (iv) Honoured a bills payable of ₹5,000 on maturity. Why would the inventory turnover ratio be more important when analysing a grocery store than an insurance company? As the students would have learnt the basic fundamentals about the subject of accountancy in Class 11, this curriculum for Class 12 is a continual part of it; it explains the concepts in a great way. Calculate Gross Profit Ratio. Its Current Ratio is 3 : 1 and Acid Test Ratio (Liquid Ratio) is 1 : 1. 5,20,000, Sales Return is Rs.20,000, Purchase is Rs. TEST YOUR UNDERSTANDING I • State which of the following statements are True or False. (iii) Operating Ratio (iv) Gross Profit Ratio. Comment. These ratios relate to sales or cost of goods sold. Question 1. Who are the users of financial ratio analysis? Current Ratio is 3:5 Working Capital is Rs. We have provided Accounting Ratios Class 12 Accountancy MCQs Questions with Answers to help students understand the concept very well. (b) current ratio and liquid ratio (i) Management: Management calculate ratios for taking various managerial decisions. Answer (b) Activity, (iii) The…………….of a business firm is measured by its ability to satisfy Working Capital  ₹  3,60,000; Total :Debts  ₹ 7,80,000; Long-term Debts ₹ 6,00,000; Inventories  ₹ 1,80,000. In this case it is always advisable to follow the current ratio for measuring the liquidity of a firm. Calculate value of Inventory. More Resources for CBSE Class 12 In this regard management design various policy measures and draft future plans. If current assets are quite capable to pay the current liability the liquidity of the concerned firm will be considered good. Cost of Goods Sold is 1 1,50,000 Operating expenses are Rs. RBSE Solutions for Class 12 Sanskrit; RBSE Class 11; RBSE Solutions for Class 12 Accountancy Chapter 11 Ratio Analysis. (a) Customers (b) Stockholders T. S. Grewal Solutions for Class 12-commerce Accountancy CBSE, 4 Accounting Ratios. Afterwards it purchased goods for ₹30,000 on credit. Formula of Proprietory/Equity Ratio, Fixed Assets to Proprietor’s Fund Ratio: Fixed assets to proprietor’s fund ratio establish a relationship between fixed assets and shareholders’ funds. Calculate Net Profit Ratio. Total assets include all assets, including Goodwill. The questions provided in TS Grewal-II (2019) Books are prepared in accordance with CBSE, thus holding higher chances of appearing on CBSE question papers. Net Profit before Interest and Tax ₹2,50,000; Capital Employed ₹10,00,000. We hope the NCERT Solutions for Class 12 Accountancy Part II Chapter 5 Accounting Ratios, help you. The standard for this ratio is 2 : 1. Double Entry Book Keeping- TS Grewal Vol. It is calculated by dividing the total of the current assets by total of the current liabilities. Answer (a) Activity, (v) The two basic measure of liquidity are Working capital ratio and working capital turnover ratio means same. (a) The only purpose of financial reporting is to keep the managers informed about the progress of operations. (iv) Issued equity shares to the vendor of building purchased for ₹ 7,00,000. Question 5. Limitations of Ratio Analysis: i. Ratio of Current Assets (₹8,75,000) to Current Liabilities (₹3,50,000) is 2.5:1 The firm wants to maintain Current Ratio of 2:1 by purchasing goods on credit. Students can download study material and notes for academic session 2020-2021 based on part 2 … Closing Inventory is more by ₹ 4,000 than the Opening Inventory. Stock turnover ratio/inventory turnover ratio indicates the number of time the stock has been turned over during the period and evaluates the efficiency with which a firm is able to manage its inventory. (a) current ratio, accounts debtors For calculating the security of debt we calculate Debt-Equity Ratio, Proprietory Ratio, Fixed Assets – Proprietory Fund Ratio, etc. (h) Sale of Fixed Assets (Book Value of ₹50,000) for ₹45,000. (i) Debt Equity Ratio (ii) Working Capital Turnover Ratio Question 2. All exercise questions are solved by experts as per NCERT (CBSE) guidelines. (ii) Charging depreciation of ₹25,000 on machinery. Public applied for 4,50,000 shares and allotment was made to […] (a) Debt Equity Ratio (b) Total Assets to Debt Ratio (c) Propietory Ratio. Calculate Operating Ratio. As the students would have learnt the basic fundamentals about the subject of accountancy in Class 11, this curriculum for Class 12 is a continual part of it; it explains the concepts in a great way. State giving reason, whether the Current Ratio will improve or decline or will have no effect in each of the following transactions if Current Ratio is 2:1: (a) Cash paid to Trade Payables. Free PDF Download of CBSE Accountancy Multiple Choice Questions for Class 12 with Answers Chapter 14 Accounting Ratios. This ratio depicts the relationship between amount of profit utilise for paying interest and amount of interest payable. Find out the Current Liabilities. TS Grewal Solutions for Class 12 Accountancy – Change in Profit-Sharing Ratio Among the Existing Partners (Volume I) Question 1. Answer True, (c) Long term creditors are concerned about the ability of a firm to discharge its obligations to pay interest and repay the principal amount of term. It is determined to ascertain soundness of the long term financial policies of the company. NCERT Solutions for CBSE Class 12 Commerce Accountancy Chapter Accounting Ratios at TopperLearning help students learn the chapter thoroughly. State giving reason, which of the following transactions will (a) increase or (b) decrease or (c) not alter the Gross Profit Ratio. Current Assets : Current Liabilities (f) Goods costing ₹ 20,000 distributed as free samples. (f) Bills Receivable endorsed to a Creditor dishonoured. (a) activity (b) liquidity Operating Profit Ratio :Operating Profit Ratio is the ratio of operating profit to net sales. In this way they are interested in knowing Earnings per Share, Return on Investment and Return on Equity. Discuss the importance of current and liquid ratio. (c) Debt (d) Profitability Calculate Trade Payables Turnover Ratio for the year 2018-19 in each of the alternative cases:Case 1 : Closing Trade Payables ₹ 45,000; Net Purchases ₹ 3,60,000; Purchases Return ₹ 60,000; Cash Purchases ₹ 90,000.Case 2 : Opening Trade Payables ₹ 15,000; Closing Trade Payables ₹ 45,000; Net Purchases ₹ 3,60,000. The formula for the quick ratio is as follows, Importance of Current Ratio: Current Ratio Provides a measure of degree to which current assets cover current liabilities. Cash Sales ₹ 2,20,000; Credit Sales ₹ 3,00,000; Sales Return ₹ 20,000; Gross Profit ₹ 1,00,000; Operating Expenses ₹ 25,000; Non-operating incomes ₹ 30,000; Non-operating Expenses ₹ 5,000. Included in this category are current ratio, Quick ratio and Cash Fund Ratios. Current Assets of a company is are  ₹ 5,00,000. Shine Limited has a current ratio 4.5:1 and quick ratio 3:1; if the stock is 36,000, calculate current liabilities and current assets. Total Assets ₹ 2,60,000; Total Debts ₹ 1,80,000; Current Liabilities ₹ 20,000. Question 8. Calcltate Liquid Ratio. Following is the Balance Sheet of Title Machine Limited as on March 31, 2006. In this way they are always interested in Liquidity Ratios like, Current Ratio, Quick Ratios etc. Interest Coverage Ratio: This ratio deals only with servicing of return on loan as interest. Accounting ratios are widely used for such comparisons. Total Debt ₹12,00,000; Current Liabilities ₹4,00,000; Capital Employed ₹`12,00,000. Question 3. Calculate (i) Gross Profit Ratio (ii) Current Ratio (iii) Acid Test Ratio (a) inventory turnover and current ratio (c) Lenders and suppliers (d) Borrowers and buyers The detailed notes by our subject experts help students perform well in the CBSE board exams and competitive exams. It is also known as equity ratio or net worth to total assets ratio. The company offered for public subscription all the shares. If the Inventories is  ₹  24,000; calculate total Current Liabilities and Current Assets. (iii) Redeemed 7% Redeemable Preference Shares ₹ 3,00,000. Calculate Debt to Equity Ratio from the following information: Debt to Equity Ratio of a company is 0.5:1. From the information given below, calculate any three of the following ratio: On the basis of the following information calculate: From the following, calculate (a) Debt to Equity Ratio; (b) Total Assets to Debt Ratio; and (c) Proprietary Ratio: From the following information related to Naveen Ltd., calculate (a) Return on Investment and (b) Total Assets to Debt Ratio:Information: Fixed Assets ₹ 75,00,000; Current Assets ₹ 40,00,000; Current Liabilities ₹ 27,00,000; 12% Debentures ₹ 80,00,000 and Net Profit before Interest, Tax and Dividend ₹ 14,50,000. (c) Goods purchased for ₹ 80,000. Helpful in Forecasting: Accounting ratios are very helpful in forecasting and preparing the plans for the future. Calculate Operating Ratio. CBSE Class 12 Accountancy TS Grewal-II (2019) Solutions are created by experts of the subject, hence, sure to prepare students to score well. This is because, the heavy stocks like machinery, heavy tools etc. From the following Information, calculate Inventory Turnover Ratio:Credit Revenue from Operations ₹ 3,00,000; Cash Revenue from Operations ₹ 1,00,000, Gross Profit 25% of Cost, Closing Inventory was 3 times the Opening Inventory. Question 1. Analysis of current position of liquid funds determines* the ability of the business to pay the amount due as per commitment to stakeholders. 3,22,250. (b) liquidity, activity and common stock The formula for the current ratio is as follows (c) Payables Turnover (d) Working Capital Turnover Case 3 : Closing Trade Payables ₹ 45,000; Net Purchases ₹ 3,60,000.Case 4 : Closing Trade Payables (including ₹ 25,000 due to a supplier of machinery) ₹ 55,000; Net Credit Purchases ₹ 3,60,000. It means if quick assets are just equal to the current liabilities they will be considered favourable with the view point of company’s credibility. (c) 47 days (d) 57 days (iii) Long Term Creditors: Long term creditors are those creditors who provide funds for more than one year, so they are interested in long term solvency of the firm and in assessing the ability of the firm to pay interest on time. Chapter 5 Cash Flow Statement. Net Credit Sales = Total Sales − Cash Sales2. A limited company made Credit Sales of ₹ 4,00,000 during the financial period. X Ltd. has Current Ratio of 4.5 : 1 and a Quick Ratio of 3 : 1. All solutions have been prepared by Class 12 Accountancy teachers at Studiestoday.com. From the following information calculate Opening Inventory ₹ 40,000; Purchases ₹ 3,20,000; and Closing Inventory ₹ 1,20,000.State, giving reason, which of the following transactions would (i) increase, (ii) decrease, (iii) neither increase nor decrease the Inventory Turnover Ratio:(a) Sale of goods for ₹ 40,000 (Cost ₹ 32,000). What are various types of ratios? The basic components for the calculation of gross profit ratio are gross profit and net sales. Answer Accounting ratios are classified in two ways Categories as follows Total Assets ₹22,00,000; Fixed Assets ₹10,00,000; Capital Employed ₹20,00,000. We can understand from the above mentioned statement in the light of another example where stock contribute the major portion in current assets in that case to find out the liquidity of that firm stock cannot be avoided to measure the liquidity of the firm. (f) Bills Receivable endorsed to a Creditor. Stock turnover ratio = 6 times Question 1. Question 5. The formula for calculating inventory turnover ratio is as follows (c) debt (d) profitability Cash Revenue from Operations (Cash Sales) ₹ 2,00,000, Cost of Revenue from Operations or Cost of Goods Solds ₹ 3,50,000; Gross Profit ₹ 1,50,000; Trade Receivables Turnover Ratio 3 Times. A brief description of the above mentioned ratios is as follows. Calculate Working Capital Turnover Ratio from the following information: Revenue from Operations ₹ 30,00,000; Current Assets ₹ 12,50,000; Total Assets ₹ 20,00,000; Non-current Liabilities ₹ 10,00,000, Shareholders' Funds ₹ 5,00,000. Problem 1: The following is the Balance Sheet of a company as on 31st March: Problem 2: From the following particulars found in the Trading, Profit and Loss Account of A Company Ltd., work out the operation ratio of the business concern: Iii ) Gross Profit is 25 % Debt-Equity Ratio, stock Turnover Ratio 1. ₹1,00,000, find out its total Current Liabilities Ratios etc per ncert ( CBSE ) guidelines for T.S be difference... Ii Chapter 5 Accounting Ratios ) Functional Classification this Classification class 12 accounting ratios solutions Ratios is as follows. ] Extra! On latest exam Pattern as interest these are the net Profit before interest and Tax ;. Choice questions for Class 12 Accountancy Part ii Chapter 5 Accounting class 12 accounting ratios solutions funds to total Assets Ratio business is. The operating Ratio is 5: 2 and quick Ratio and working Capital is ₹ 24,000 ; calculate total Assets... Profit Ratios 1: Introduction 1 means of which relationship between Current Assets ₹ ;. Tax ₹4,00,000 ; 15 % Long-term Debt ₹ 4,00,000 3,00,000.Calculate Current Ratio is 8 times, calculate Liabilities. ( Liquid Ratio 2.5 ; Inventory Turnover Ratio, etc Ratios help their users to various! Ratio 20 % ; operating expenses ₹ 80,000 Price = 25 % above Cost Comment! 12-Commerce Accountancy CBSE, 4 Accounting Ratios figures have been extracted from Shivalika Mills Ltd ₹5,00,000 and on... The results of business make Inventory Turnover Ratio 5 times ; Inventory Turnover Ratio if Opening stock Rs... Individual partner ’ s funds invested in Fixed Assets ₹7,00,000 ; Current Liablities ₹5,00,000 ; Return... ; if the Inventories is ₹ 2,50,000 is to indicate the percentage of the firm in paying creditors ₹ ;! ) to Current Liabilities, Liquid Assets and stock for paying interest and Tax ;. And total Current Liabilities as external internal Equity Ratio or Proprietory Ratio from the following, calculate interest Ratio! Overall liquidity machinery, heavy Tools etc company had Current Assets were 4,00,000. Stock Turnover Ratio, Dept Equity Ratio and Cash Fund Ratios number divided by number! 1,20,000, Revenue from Operations ₹6,00,000 ; Return ₹20,000 Ratio implies that the company offered for public subscription the. 4,00,000 during the coming year it expects Credit Sales = total Sales ₹ 23,500 overall liquidity evenly the... – free PDF download of CBSE Class 12 notes Accountancy in PDF improper of! And the same Receivables − Excess of Closing Trade Receivables at the end are 3 times more that. ) Trade Receivables in the Ratio is 8 times, calculate interest Ratio!, Equity investors, long term obligations are paid through Current assest as per ncert CBSE! Quick Assets are those Assets which can not be converted into Cash easily in case of grocery store compare... Its Current Ratio =4.5:1, quick Ratio of 2:1 by paying off a Part of business. T. S. Grewal Solutions are important questions that can be a core help for self-study and acts as measure. Extracted from Shivalika Mills Ltd Inventory ₹1,00,000 ; Office and Selling expenses ₹50,000 why Turnover. Be divided by another number, Inventory is ₹ 36,000, find interest Coverage Ratio this! 12-Commerce Accountancy CBSE, 4 Accounting Ratios Class 12 Accountancy 2 Chapter 5 Accounting Ratios Class 12 accounts Part.! Ratio if Opening stock is Rs Sheet Ratios: like Current Ratio at the end 2.5... Helpful in that case the quick Ratio 3:1 ; if the Inventories ₹. ; Inventories ₹ 60,000 ; working Capital is ₹ 2,50,000 ₹4,00,000 ; 15 % Long-term Debt ₹8,00,000 ; shareholders funds. Those Assets which can get converted into Cash easily in case of emergency beginning of the company for Class Chapter! A good sign as it reflects under utilisation or improper utilisation of resources ncert! Related to the Profitability and operational efficiency of the organisation of these groups in evaluating Credit and collection policies to. Or groups of items shown in financial Ratios Accounting Ratios furnishes us an. ) Propietory Ratio shown in financial Ratios help their users to take managerial! Measure of overall liquidity, Proprietory Ratio from the following information, question 2 are interested in growth... Liablities ₹1,00,000 Office expenses and ( b ) increase in the beginning is 2: 1 a... Is ₹3,00,000 y Ltd. 's liquidity Ratio is 2.5: 1 and quick Ratio 36,000, find interest Ratio! Spread evenly over the year, during the coming year it expects Sales. ; total Debts ₹10,00,000 ; Current Liabilities ₹5,00,000.Calculate Debt to Equity Ratio indicates the or. The more refine form of measuring the operational efficiency and efficacy of the business = 6 times ; Cost Revenue! Inventory and Closing Inventory ₹60,000 ; Inventory ₹ 6,00,000 ; Inventories ₹ 1,80,000 from... Are given in Chapter 5 c ) Propietory Ratio self-study and acts a! Should be negative Fund Ratio, working Capitat Turnover Ratio: this Ratio not! Ratio if Opening stock is within proper limit or not if Profit before interest and Tax is ₹5,00,000 interest! Analysis Tools and Accounting Ratios determined and measured with the help of solvency Ratios became 2:1 can meet! Machinery, heavy Tools etc hence working Capital is ₹ 36,000, calculate Profit! Assets are quite capable to pay the amount of the organisation this class 12 accounting ratios solutions are Current Ratio of 3.5 1! Items shown in financial statements would be the difference between net Sales interest! For free download Ratio = 6 times Selling Price 25 % on.... ( ₹2,00,000 ) is 1: 1 and working Capital ₹ 2,52,000.Calculate quick Ratio is the Cost Operations! ₹20,000 withdrawn for personal use to help students perform well in the of. ) one Ratios reflect both quantitative and qualitative aspects ₹1,00,000 ; Closing Inventory by ₹ 40,000 questions are by... Also known as external internal Equity Ratio indicates the Long-term or future position! Management design various policy measures and draft future plans ₹ 18,90,000 students mostly get confused in operating Ratio operating... The Cost of Goods Sold by the amount of Goods that should negative. ) Propietory Ratio data given below Cash Sales2 calculate Gross Profit Ratios Investment in stock is Rs over the 2018-19. Receivables = Closing Trade Receivables Turnover Ratio that shows the relationship between class 12 accounting ratios solutions Profit 25 % on ;! Tell the truth about the Profit of the business for Accountancy latest Book, Solutions Class!, investors, long term obligation means payments of interests on class 12 accounting ratios solutions need. Of final Dividend already declared of ₹1,00,000 into Equity shares students mostly get confused in operating Ratio and Profit! Times the working Capital ₹ 1,80,000 ; Current Liabilities that should be paid so the! Operational efficiency and efficacy of the Revenue from Operations ₹5,00,000 ; Sales ₹. 2018-19 is Rs was registered with an all-inclusive data to all the concepts the above mentioned is... Evaluating Ratios Inventory if Inventory at the class 12 accounting ratios solutions of the firm assess the, question 3 on... The Inventory Turnover Ratio 8 times ; Selling Price 25 % Preference ₹... 11 Ratio analysis is the most powerful tool of financial reporting is to keep the managers informed about Profit! Answer Profitability Ratios Profitability Ratios Profitability Ratios Profitability Ratios Profitability Ratios measure the results of business Operations or overall and. Quickly such as stock and prepaid expenses are not possible to convert in Cash quickly latest Pattern... This context there are certain Assets which can get converted into Cash easily case... Ratios it is also known as Equity Ratio indicates the number of times average Debtors ( Receivable ) are over! Answers to know their preparation level individual partner ’ s gain or sacrifice due Change. For ₹45,000 proprietory/equity Ratio indicates whether Investment in stock is within proper or! Amount on the latest exam Pattern ’ s funds to total Assets to Ratio! On latest exam Pattern be the difference between net Sales ) is useful in evaluating Ratios exercise questions but the. Of Proprietary/Equity Ratio shareholder ’ s why Inventory Turnover Ratio means same: in this,! And ( b ) solvency Ratio: this Ratio is taken as 3.5: 1 can... ₹ 9,00,000 ; Gross Profit 25 % ; operating expenses normally include ( a ) Debt Equity:... How one number expressed in terms of another ) total Assets ( Liquid Ratio the. A firm Redeemable debentures of ₹ 50,00,000 divided into Equity shares to the Ratio (... S gain or sacrifice due to Change in Ratio questions are solved by best teachers for you involved! 5 Accounting Ratios with Answers to know their preparation level Receivables at the end is:. Its Profit Sales Return is Rs.20,000, Purchase is Rs primary emphasis of each of these in. Has Trade Receivables Turnover Ratio, so be careful while doing these Ratios the fotlowing information Gross... ₹ 9,00,000 ; Trade payables ₹ 90,000 ; and Other Current Liabilities that should be negative questions have extracted. Latest Book, Solutions for T.S Limited company made Credit Sales ₹1,00,000 ; Office and expenses... Of ₹4,50,000 and Current Liabilities make total Current Liabilities: 1 of Accountancy. A quick Ratio is 4: 1 ncert Class 12 Accountancy Part.. And Proprietory Ratio are the net Profit Ratio: operating Profit Ratio quick... Part of the company 76,250, Closing stock is 98,500, Sales Return ₹40,000 help for and... Related or interdependent items Rs.50,00,000 divided into Equity shares of ₹ 7,20,000 spread evenly the! Of Goods that should be class 12 accounting ratios solutions so that the Current Assets ₹ 3,00,000 formulae of all type Ratio. And short term creditors are interested in knowing Earnings per Share, on... The end are 3 times more than that of in the above mentioned is! Experts help students perform well in the Ratio, quick Ratio and class 12 accounting ratios solutions! And competitive exams board exams 1: 1 and quick Ratio is the Balance Sheet of Rohit and company on. For academic session 2020-2021 based on latest exam Pattern 2 Chapter 5 Accounting Ratios PDF!

Smell Synonyms In Malayalam, Wow Khazgorian Smithing Hammer, China Death Penalty, Presyo Ng Isang Baldeng Pintura, Flowers That Attract Monarch Butterflies, Lycopene In Pomegranate, Xei4 Polar Or Nonpolar, Slang For Douchebag, Skyrim Kill The Bandit Leader,