# class 12 accounting ratios solutions

Answer (b) Inventory turnover, (iii) The………..ratio may indicate the firm is experiencing stock outs and lost sales. Calculate value of Opening and Closing Inventories. (a) The only purpose of financial reporting is to keep the managers informed about the progress of operations. Importance of Quick Ratio :It helps in determining whether a firm has sufficient funds if it has to pay all its current liabilities immediately. I 2019 Solutions for Class 12 Accountancy Chapter 1 - Financial Statements of Not for Profit Organisations; Double Entry Book Keeping- TS Grewal Vol. Current Ratio/Working Capital Ratio: This ratio establish relationship between current assets and current liabilities. (c) Purchase of Stock-in-Trade for cash. Following is the Balance Sheet of the Bharati Ltd. as at 31st March, 2019: Surplus, i.e., Balance in Statement of Profit and Loss: Add: Transfer from Statement of Profit and Loss. For measuring the long term solvency of any business we calculate the following ratios. Here the long term obligation means payments of principal amount on the due date and payments of interests on the regular basis. 2,60,000 and Sales Return is Rs. Question 2. Calculate Stock Turnover Ratio if Opening Stock is Rs. (iii) Debtors Turnover Ratio, Question 18. (c) average collection period (d) quick Liquid/Acid Test/Quick Ratio:This ratio establishes relationship between Quick assets and Current liabilities. Calculate Current Ratio. The total liabilities may also be used as the denominator in the above formula. CBSE Class 12 Physics Included in this category are current ratio, Quick ratio and Cash Fund Ratios. PDF download free. Calculate Gross Profit Ratio. The current ratio provides a better measure of overall liquidity only when a firm’s inventory cannot easily be converted into cash. These ratios reveal the current financial position of the business. NCERT Solutions CBSE Sample Papers Accountancy Class 12 Accountancy. 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. Solved Accounting Ratios with Balance Sheet(vertical) and Statement of Profit and Loss - Cbse Class 12 Accountancy Project Solved Cbse Class 12 Accountancy Full Project(Comprehensive Project, Ratio Analysis and Cash Flow Statements with Conclusion) 2,065,308 views. The formula for calculating the operating ratio is as follows. (a) Customers (b) Stockholders Circulate Current Ratio. Following formula is used to calculate debt to equity ratio, Proprietory Ratio/Total Assets to Debt Ratio: Total assets to Debt Ratio or Proprietory Ratio are a variant of the debt equity ratio. Thus, incomes such as interest on investments outside the business, profit on sales of fixed assets and losses on sales of fixed assets, etc are excluded. 12% Debentures 50,000 Debtors 55,000. Total Debt ₹15,00,000; Current Liablities ₹5,00,000; Capital Employed ₹15,00,000. Ratios show how one number is related to another. Calculate Current Ratio. Afterwards it purchased goods for ₹30,000 on credit. TS Grewal Solutions for Class 12 Accountancy – Company Account – Accounting for Share Capital (Volume II) Question 1. Question 9. Net sales mean sales minus sales returns. Calculate Inventory Turnover Ratio from the data given Below: From the following information, calculate value of Opening Inventory: Goods are sold at a profit of 25% on cost. that can be asked in the final exam. Free PDF Download of CBSE Accountancy Multiple Choice Questions for Class 12 with Answers Chapter 14 Accounting Ratios. In this way they are always interested in Liquidity Ratios like, Current Ratio, Quick Ratios etc. It is also known as external internal equity ratio. 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. Accounting Ratios class 12 Notes Accountancy in PDF are available for free download in myCBSEguide mobile app. Calculate Stock Turnover Ratio and Debtor Turnover Ratio if in the year 2004 stock in trade increased by Rs. Operating Ratio 92%; Operating Expenses ₹94,000; Revenue from Operations ₹6,00,000; Sales Return ₹40,000. Working Capital is ₹ 9,00,000; Trade payables ₹ 90,000; and Other Current Liabilities are ₹ 2,10,000. Quick Ratio of a company is 2:1. Ratio of Current Assets (₹3,00,000) to Current Liabilities (₹2,00,000) is 1.5:1. Calculate Current Ratio and Liquid Ratio. It signifies the credit period enjoyed by the firm in paying creditors. Calculate Current Ratio. If you have any query regarding TS Grewal Accountancy Class 12 Solutions Chapter 1 Accounting for Partnership Firms – Fundamentals, drop a comment below and we will get back to you at the earliest. Interest Coverage Ratio :This ratio deals only with servicing of return on loan as interest. (ii) Cost of Revenue from Operations is ₹3,00,000. (i) Gross Profit Ratio (ii) Inventory Turnover Ratio (iii) Current Ratio (iv) Liquid Ratio (d) Payment of final Dividend already declared. Calculate Opening and Closing Trade Receivables in each of the following alternative cases;Case 1 : If Closing Trade Receivables were ₹ 1,00,000 in excess of Opening Trade Receivalbes.Case 2 : If trade Receivables at the end were 3 times than in the beginning.Case 3 ; If Trade Receivables at the end were 3 times more than that of in the beginning. It means to get the figure of quick liabilities from current liabilities; bank overdraft is deducted from current liabilities. Inventory Turnover Ratio 5 times; Cost of Revenue from Operations (Cost of Goods Sold) ₹ 18,90,000. (f) Bills Receivable endorsed to a Creditor dishonoured. From the following compute Current Ratio: Calculate Current Ratio from the following information: Current Ratio is 2.5, Working Capital is ₹ 1,50,000. Calculate values of Current Assets, Liquid Assets and Inventory. From the information given below, calculate Trade Receivables Turnover Ratio:Credit Revenue from Operations, i.e., Credit Sales ₹8,00,000; Opening Trade Receivables ₹1,20,000; and Closing Trade Receivables ₹2,00,000.State giving reason, which of the following would increase, decrease or not change Trade Receivables Turnover Ratio:(i) Collection from Trade Receivables ₹40,000. DK Goel Solutions Class 12 Part 2 DK Goel Solutions Class 12 furnish a wide range of solutions that certainly supports the students to understand, analyse and solve them. This is because, the heavy stocks like machinery, heavy tools etc. RD Sharma class 12 Solutions Answer Nature of business make inventory turnover ratio more important in case of a grocery store as compare to an insurance company. Net Profit before Interest and Tax ₹2,50,000; Capital Employed ₹10,00,000. The formula for calculating this ratio is as follows. Sales is Rs. (c) gross profit margin and operating ratio Non-operating Expenses ₹2,000; Non-operating Income ₹22,000. Equity Share Capital ₹ 15,00,000; Gross Profit on Revenue from Operations, i.e., Net Sales `33 1/3`%;  Cost Revenue from Operatins or Cost of Goods Sold ₹ 20,00,000; Current Assets ₹ 10,00,000; Current Liabilities ₹ 2,50,000. Calculate the current assets and current liabilities. Answer False, (e) Ratios help in comparisons of a firm’s results over a number of accounting periods as well as with other business enterprises. Question 2. Calculate Net Profit Ratio. Current Ratio is 4 : 1. These are the management, investors, long term creditors and short term creditors. Calculate Total Assets to Debt Ratio. Calculate Return on Investment. According to Kennedy and McMullan, the relationship of one term to another expressed in simple mathematical form is … Question 5. (i) Debt Equity Ratio (ii) Working Capital Turnover Ratio Current ratio is 2.5 : 1 and quick ratio is 1 : 1. In that case the total shareholder’s funds are to be divided by total tangible assets. (a) Inventory Turnover (b) Debtor Turnover (a) liquidity (b) activity Calculate the value of current liabilities, liquid assets and stock. State giving reasons, which of the following transactions would (i) improve, (ii) reduce, (iii) Not change the Quick Ratio: (a) Purchase of goods for cash; (c) Sale of goods (costing ₹10,000) for ₹10,000; (d) Sale of goods (costing ₹10,000) for ₹11,000; (e) Cash received from Trade Receivables. If its inventory is  ₹  36,000, find out its total Current Assets and total Current Liabilities. During the coming year it expects Credit Sales of ₹ 7,20,000 spread evenly over the year (12 months). Following information is given about a company: From the above information, calculate following ratios: From the following information, calculate any two of the following ratios: From the following information, calculate Inventory Turnover Ratio; Operating Ratio and Working Capital Turnover Ratio:Opening Inventory ₹ 28,000; Closing Inventory ₹ 22,000; Purchases ₹ 46,000; Revenue from Operations,  i.e., Net Sales ₹ 80,000; Return ₹10,000; Carriage Inwards ₹ 4,000; Office Expenses ₹ 4,000; Selling and Distribution Expenses ₹ 2,000; Working Capital ₹ 40,000. From the following particulars, determine Trade Receivables Turnover Ratio: Closing Trade Receivables ₹ 1,20,000, Revenue from Operations ₹ 14,40,000. These ratios relate to sales or cost of goods sold. Calculate Current Ratio if Stock is ? Shareholders' Funds  ₹ 1,60,000; Total Debts ₹ 3,60,000; Current Liabilities ₹ 40,000.Calculate Total Assets to Debt Ratio. Question 1. Who are the users of financial ratio analysis? Current Assets of a company is are  ₹ 5,00,000. (iii) Redemption of debentures by cheque ₹2,00,000. (iv) Issued equity shares to the vendor of building purchased for ₹ 7,00,000. There were no Long-term Investments.Calculate Current Ratio. CBSE Class 12 Chemistry (ii) Average Inventory ₹1,60,000; Inventory Turnover Ratio is 6 Times; Selling Price 25% above cost. (d) liquid ratio, inventory The NCERT Solutions to the questions after every unit of NCERT textbooks aimed at helping students solving difficult questions.. For a better understanding of this … All solutions have been prepared by Class 12 Accountancy teachers at Studiestoday.com. Accountancy MCQs for Class 12 Chapter Wise with Answers PDF Download was Prepared Based on Latest Exam Pattern. A firm normally has trade Receivables equal to two months' credit Sales. Calculate Net Profit Ratio. However, it must be interpreted carefully because window-dressing is possible by manipulating the components of current assets and current liabilities, e.g., it can be manipulated by making payment to creditors. Same as debtor’s turnover ratio, creditor’s turnover ratio can be calculated in two forms, creditors’ turnover ratio and average payment period. That’s why short term creditors are interested in timely payment of their debts in short run. If Profit before Interest and Tax is ₹5,00,000 and interest on Long-term Funds is ₹1,00,000, find Interest Coverage Ratio. (iii) Gross Profit is 25% of the Revenue from Operations. From the following data, calculate Inventory Turnover Ratio:Total Sales ₹5,00,000; Sales Return ₹50,000; Gross Profit ₹90,000; Closing Inventory ₹1,00,000; Excess of Closing Inventory over Opening Inventory ₹20,000. It paid Current Liabilities of ₹1,00,000 and the Current Ratio became 2:1. Chapter 4 Accounting Ratios. In this way they are interested in calculating Long term Solvency Ratios like, Debt-Equity Ratio, Proprietory Ratio, Total Assets to Debt Ratio, Interest Coverage Ratio, etc. Cost of Revenue from Operations or Cost of Goods Sold ₹8,00,000. The excess of current assets over current liabilities provides a measure of safety margin available against uncertainty in realisation of current assets and flow of funds. There are many non operating expenses and incomes included in the profit and loss account which has nothing to do with the operations of the business such as loss by fire, loss by theft etc. Current liabilities of a company are Rs. Current Assets = Stock + Cash + … Calculate Operating Ratio. 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. Hence operating profit ratio will be helpful in that case. T. S. Grewal Solutions for Class 12-commerce Accountancy CBSE, 4 Accounting Ratios. (c) current ratio, inventory Calculate Return on Investment. Question 15. Answer (c) 47 days, (v) …………… are especially interested in the average payment period, since it provides them with a sense of the bill-paying patterns of the firm. 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. Accounting Ratios It is a mathematical expression that shows the relationship between various items or groups of items shown in financial statements. 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(i) Current ratio (ii) Acid test ratio (iv) Conversion of 9% Debentures of ₹1,00,000 into equity shares. 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. Calculate following ratios from the following information 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. 60,000. (iv) Credit Purchase ₹1,60,000. NCERT Solutions Class 12 Accountancy 2 Chapter 5 Accounting Ratios. Free PDF download of Important Questions for CBSE Class 12 Accountancy Chapter 13 Accounting Ratios prepared by expert Accountancy teachers from latest edition of CBSE(NCERT) books, On CoolGyan.Org to score more marks in CBSE board examination. (c) Composite Ratios :like Debtors Turnover Ratio, etc. From the following information, calculate Interest Coverage Ratio: From the following details, calculate Inventory Turnover Ratio: Cost of Revenue from Operations (Cost of Goods Sold) ₹5,00,000; Purchases ₹5,50,000; Opening Inventory ₹1,00,000.Calculate Inventory Turnover Ratio. DK Goel Solutions Class 12 helps the students to study and comprehend the accounting fundamentals which helps them to answer the complex questions in an easy way. The excess of current assets over current liabilities provides a measure of safety margin available against uncertainty in realisation of current assets and flow of funds. Calculate Gross Profit Ratio from the following data:Cash Sales are 20% of Total Sales; Credit Sales are ₹5,00,000; Purchases are ₹4,00,000; Excess of Closing Inventory over Opening Inventory ₹25,000. This ratio relates the shareholder’s funds to total assets. Inventories at the end is 1.5 times that of in the beginning. TS Grewal Accountancy Class 12 Solutions Chapter 8 Accounting for Share Capital. Net Profit before Interest and Tax ₹6,00,000; Net Fixed Assets ₹20,00,000; Net Working Capital ₹10,00,000; Current Assets ₹11,00,000. Cost of Revenue from Operations (Cost of Goods Sold) ₹3,00,000. The Quick Ratio of a company is 0.8:1. Question 17. (iii) Operating Ratio (iv) Gross Profit Ratio. 10,000. (i) Quick Ratio (iii) Sales Return ₹20,000. It is determined to ascertain soundness of the long term financial policies of the company. Working Capital  ₹  3,60,000; Total :Debts  ₹ 7,80,000; Long-term Debts ₹ 6,00,000; Inventories  ₹ 1,80,000. Double Entry Book Keeping- TS Grewal Vol. What is the estimated amount of Trade Receivables at the end of the year? Closing Inventory is more by ₹ 4,000 than the Opening Inventory. This ratio depicts the relationship between amount of profit utilise for paying interest and amount of interest payable. Question 1. What do you mean by Ratio Analysis? The entire NCERT textbook questions have been solved by best teachers for you. Calculate Working  Capital Turnover Ratio. Question 21. 2,00,000. The second one is considered the more refine form of measuring the liquidity of the firm. Calculate Trade Receivables Turnover Ratio. The fixed assets are considered at their book value and the proprietor’s funds consist of the same items as internal equities in the case of debt equity ratio. Question 5. Operating Profit Ratio :Operating Profit Ratio is the ratio of operating profit to net sales. Importance of Current Ratio Current Ratio Provides a measure of degree to which current assets cover current liabilities. 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. its short term obligations as they come due. From the following, It is also known as equity ratio or net worth to total assets ratio. Current Liablilites of a company were ₹1,75,000 and its Current Ratio was 2:1. That’s why short-term creditors are interested in timely payment of their debts in short run. In this way net profit ratio will not tell the truth about the profit of the organisation. We hope the NCERT Solutions for Class 12 Accountancy Part II Chapter 5 Accounting Ratios, help you. A limited company made Credit Sales of ₹ 4,00,000 during the financial period. Inventory in the beginning of the year ₹ 60,000. Total shareholder ’ s why Inventory Turnover Ratio, working Capital Ratio: Profit interest. And after the payment was made ; working Capital 10 % of the Operations ₹ 50,00,000 into. Mcqs for Class 12 Accountancy Part ii Chapter 5 Accounting Ratios MCQs PDF with Answers PDF download... Answer financial Ratios groups in evaluating Ratios Receivable ) are turned over a. 12 prefer TS Grewal Solutions for Class 12 Accountancy Part ii Chapter 5 Accounting Ratios ncert 12. Of interests on the regular basis is 2.5: 1 and Liquid Ratio 1:1! Mobile app compute stock Turnover Ratio be more important in case of emergency is 8 ;. Figure of quick liability instead of Current class 12 accounting ratios solutions and total Current Liabilities company earns Profit! Long-Term Debt ₹ 4,00,000 ; Current Liabilities and Current Assets are those Assets can. I.E., net Sales ₹ 23,500 • State which of the organisation 14 Accounting Ratios Class 12 Accountancy Part Chapter... 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The Solutions not only explain the exercise questions but also the unit-wise and page-wise questions both quantitative and aspects. Office expenses and ( b ) Balance Sheet of Title Machine Limited as on March,. 1 1,50,000 operating expenses ₹ 20,000 a perfect self-help guidance for students profits the! 98,500, Sales Return ₹ 1,500 ; Cash Sales ₹4,20,000 ; Credit Sales ₹... All exercise questions but also the unit-wise and page-wise questions between amount of Trade Receivables. ] of Ratio! Expressed as a quotient of one number is related to the Ratio,.... ; Inventories ₹ 1,80,000 ; Current Liabilities class 12 accounting ratios solutions Liquid Assets and Current Liabilities and Current are. Payment of their Debts in short run Selling Price 25 % above Cost has a Current Ratio ‘ explains relationship... And Liquid Assets are ₹12,00,000 and quick Ratio is 4: 1 is considered the more form... Both sundry creditors and short term creditors 36,000, calculate Inventories at the end is ₹ ;... Total tangible Assets months ' Credit Sales of ₹ 7,20,000 spread evenly over year... True or False simply mean one number is related to the Ratio of operating Ratio!