1.

Profit and Loss Account

Opening Stock 76,250 Sales 5,00,000
Purchases 3,15,250 Closing Stock 98,500
Carriage Inwards 2,000
Wages 5,000
Gross Profit 2,00,000
--------------- ---------------
5,98,500 5,98,500
--------------- --------------
Administration expenses 1,01,000 Gross Profit 2,00,000
Selling Expenses 12,000
Financial Expenses Non-Operating Incomes
Interest 1,200 Interest on Securities 1,500
Discount 2,400 Dividend on Shares 3,750
Bad Debts 3,400 Profit on Sale of Shares 750
Non-Operating Expenses
Loss on Sale of Securities 350
Provision for Legal Suit 1,650
Net Profit 84,000
--------------- ---------------
2,06,000 2,06,000
--------------- --------------
Calculate: *Gross Profit Ratio *Net Profit Ratio *Operating Ratio *Operating Profit Ratio
*Stock Turnover Ratio *Expenses Ratio

PROBLEMS ON TURNOVER RATIOS

2. Calculate the Debtors Turnover Ratio

Total Sales for the Year 1998 Rs. 1,00,000 Cash Sales for the year 1998 Rs. 20,000
Debtors as on 1.1.98 Rs. 10,000 Debtors as on 31.12.98 Rs. 15,000
Bills Receivable as on 1.1.98 Rs. 7,500 Bills Receivable as on 31.12.98 Rs. 12,500

3. Calculate the Debtors Turnover Ratio and Debt Collection Period

Credit Sales for the year Rs.12,000 Bills Receivable Rs.1,000 Debtors Rs.1,000

4. A company sells goods on cash as well as on credit. The following is extracted for the year
ending 31.12.98
Total Gross Sales Rs.1,00,000 Cash Sales(Included in Gross) Rs.20,000
Sales Return Rs.7,000 Total Debtors for Sales as on 31.12.98 Rs.9,000
Bills Receivable as on 31.12.98 Rs.2,000 Provision for Doubtful Debts on 31.12.98 Rs.1,000
Total Creditors as on 31.12.98 Rs.10,000
Calculate the Average Collection Period.
5. From the following figures calculate the Creditors Turnover Ratio and Average age of Accounts
Payable.
Credit Purchases during 1998 Rs.1,00,000 Bills Payable as on 1.1.98 Rs.4,000
Creditors as on 1.1.98 Rs.20,000 Bills Payable as on 31.12.98 Rs.6,000
Creditors as on 31.12.98 Rs.10,000

6. Balancesheet
Liabilities Assets
Equity Share Capital 1,00,000 Plant and Machinery 1,50,000
8% Preference Shares 1,00,000 Land and Building 1,00,000
10% Debentures 50,000 Stock 40,000
Profit and Loss A/c 50,000 Sundry Debtors 30,000
Sundry Creditors 40,000 Cash and Bank 20,000
Provision for Taxation 10,000 Prepaid Expenses 10,000
Calculate *Current Ratio *Quick Ratio *Debt Equity Ratio

7. Calculate Current Ratio and Quick Ratio

Sundry Debtors 40,000 Sundry Creditors 20,000 Prepaid Expenses 20,000
Debentures 1,00,000 Short Term Investments 10,000 Inventories 20,000
Loose Tools 5,000 Outstanding Expenses 20,000 Bills Payable 10,000

8. Calculate Debt Equity Ratio

Preference Share Capital 1,00,000 Unsecured Loans 50,000
Equity Share Capital 2,00,000 Creditors 40,000
Capital reserve 50,000 Bills Payable 20,000
Profit and Loss A/c 50,000 Provision for Taxes 10,000
12% Debentures 1,00,000 Proposed Dividends 20,000

9. Calculate Proprietary Ratio, Current Ratio and Debt Equity Ratio

Liabilities Assets
Preference Share Capital 1,00,000 Fixed Assets 2,00,000
Equity Share Capital 2,00,000 Current Assets 1,00,000
Reserve and Surplus 50,000 Goodwill 50,000
Debentures 1,00,000 Long Term Investments 1,50,000
Creditors 50,000

10. Calculate Current Ratio, Return on Total Resources, Quick Ratio, Turnover of Fixed Assets

Liabilities Assets
Equity Share Capital 20,000 Land and Building 15,000
Reserves 9,000 Plant and Machinery 8,000
Current Liabilities 13,000 Stock in Trade 14,900
Profit and Loss A/c 6,000 Sundry Debtors 7,100
Cash and Bank 3,000
Note : Net Profit is Rs.15,000 and Turnover is Rs.85,000
11. From the following Balance Sheet calculate : Current Ratio, Quick Ratio,
Debt Equity Ratio, Fixed Assets Ratio.

Liabilities Assets
Share Capital 20,000 Goodwill 5,000
Debentures 10,000 Freehold Property 15,000
Trade Creditors 3,000 Plant and Tools 8,300
Reserve Fund 5,000 Stock 3,500
Profit and Loss A/c 2,000 Bills Receivable 450
Debtors 2,750
Cash at Bank 5,000

12. Calculate the following ratios from the balance sheet given below:
Debt Equity Ratio Liquidity Ratio Fixed Assets to Current Assets Fixed Assets Turnover

Liabilities Assets
Share Capital 1,00,000 Goodwill 60,000
Reserves 20,000 Fixed Assets 1,40,000
Profit and Loss A/c 30,000 Stock 30,000
Secured Loans 80,000 Sundry Debtors 30,000
Sundry Creditors 50,000 Advances 10,000
Provision For Tax 20,000 Cash Balance 30,000
Note: Sales for the year Rs.5,60,000

13. Calculate *Current Ratio *Quick Ratio *Operating Ratio *Operating Profit Ratio
*Stock Turnover Ratio *Fixed Assets Turnover Ratio *Debtors Turnover Ratio
* Net Profit to Capital Employed * Debt Collection Period

Liabilities Assets
Share Capital 5,00,000 Land and Building 5,00,000
General Reserve 4,00,000 Plant and Machinery 2,00,000
Profit and Loss A/c 1,50,000 Stock 1,50,000
Sundry Creditors 2,00,000 Sundry Debtors 2,50,000
Cash and Bank Balance 1,50,000
Profit and Loss Account
Opening Stock 2,50,000 Sales 18,00,000
Purchases 10,50,000 Closing Stock 1,50,000
Gross Profit 6,50,000
--------------- ----------------
19,50,000 19,50,000
--------------- ----------------
Selling & Dist Exp 1,00,000 Gross Profit 6,50,000
Administration Exp 2.30,000 Profit on Sale of Fixed Asset 50,000
Finance Expenses 20,000
Net Profit 3,50,000
 PART B
PROBLEMS BASED ON SALES, GROSS PROFIT, COST OF GOODS SOLD ETC

14. From the following compute the value of Opening Stock and Closing Stock
*Sales Rs.10,00,000 *Gross Profit 25 % on Sales *Stock Turnover Ratio 10 Times
Closing Stock is more than the Opening Stock by Rs.25,000

15. Compute the Balance Sheet items for a firm having a sale of Rs.36,00,000
Sales / Total Assets = 3 Sales / Debtors = 15 Sales / Fixed Assets = 5
Current Ratio = 2 Sales / Current Assets = 7.5 Total Assets / Net Worth = 2.5
Sales / Inventories = 20 Debt / Equity = 1

Liabilities Assets
Net Worth ? Fixed Assets ?
Long Term Debt ? Cash ?
Current Liabilities ? Stock ?
Sundry Debtors ?

16. Following are the ratios to the Trading Activities of A SQUARE Ltd
Debtors Velocity 3 Months Stock Velocity 8 Months
Creditors Velocity 2 Months Gross Profit Ratio 25%

Gross Profit for the year is Rs. 4,00,000 Closing Stock of the Year Rs.10,000 ,more than the Opening
Stock . Bills Receivable amounts to Rs.25,000 and Bills Payable Rs.10,000
Find Out Sales, Sundry Debtors, Closing Stock and Sundry Creditors

17. From the following information prepare a Balance Sheet with as many details as possible
*Gross Profit Rs.80,000 *Current Assets Rs.1,50,000 *Accounts Payable Velocity 90 days
*Stock Velocity 6 times *Bills Receivable Rs.20,000 *Gross Profit to COGS ⅓
*Opening stock Rs.36,000 *Bills Payable Rs.5,000 *Accounts Receivable Velocity 72 Days
*Fixed Assets Turnover Ratio 8 times * Assume 360 Days in a Year.

18. From the following details, prepare a statement of Proprietary Funds

Capital Turnover Ratio (On Cost of Sales) =2 Debtors Velocity 2 Months
Gross Profit Turnover Ratio 20% Fixed assets turnover ratio(on cost of sales)=4
Creditors Velocity 73 Days Stock Velocity 6 Times Gross Profit Rs.60,000
Reserve and Surplus amount to Rs.20,000.
Closing Stock was Rs.5000 in Excess of Opening Stock
 PART C
PROBLEMS BASED ON CURRENT RATIO, QUICK RATIO, WORKING CAPITAL ETC

19. Current Ratio 2.5 Working Capital Rs.60,000

Calculate the amount of Current Assets and Current Liabilities

20. With the help of the following ratios draw the balance sheet of the company
Current Ratio = 2.5 Liquidity Ratio = 1.5 Working Capital Rs.3,00,000 Gross Profit Ratio 20%
Debt Collection Period = 2 Months Reserves and Surplus to Capital 0.50
Stock Turnover Ratio(Cost of Sales / Closing Stock) = 6 Times
Fixed assets to Shareholders net worth = 0.80
Fixed assets turnover ratio (On Cost of Sales) = 2 Times.

21. From the following information prepare Balance Sheet

Working Capital Rs.75,000 Liquid Ratio = 1.15 Reserve and Surplus Rs.1,00,000
Bank Overdraft Rs.60,000 Current Ratio = 1.75 Long Term Liabilities = Nil
Fixed Assets To Proprietors Funds = 0.75

22. From the following particulars prepare the Balance Sheet

Sales for the year Rs.20,00,000 Gross Profit Ratio 25% Current Assets Ratio =1.5
Debt Collection Period 1.5 Months Turnover to Fixed Assets 1.5 Stock Turnover Ratio = 15
Ratio of Reserves to Share Capital ⅓ Fixed Assets to Net Worth 0.83
Quick Assets (Cash and Debtors) ratio 1.25
The Term “Turnover” refers to Cost of Sales and the term “Stock” to Closing Stock

23.Prepare a Trading, Profit & Loss A/c and Balance Sheet of Mr.A
Gross Profit Ratio 25% Fixed Asset / Capital = 5/4 Net Profit / Sales =20%
Fixed Assets / Total Current Assets = 5/7 Stock Turnover Ratio 10
Closing Stock Rs.1,00,000 Fixed Asset Rs.10,00,000
Net Profit / Capital = 1/5 Capital to Total Liabilities 1/2

24. The following information relates to a company which has a

Working Capital Rs3,20,000 Current Ratio =1.8 Liquid Ratio = 1.2
Inventory Turnover Ratio (On Cost of Sales) = 12 Gross Profit on Sales 25%
Credit Period = 1 Month
Calculate the current assets and current liabilities with break up.
EXTRA SUMS

25. Calculate Gross Profit Ratio

Sales 2,00,000 Cost of Production 80,000 Sales Returns 20,000
Opening Stock of Finished Goods 50,000 Closing Stock of Finished Goods 31,000

26. MAHAM Company produces two products A and M. The operating results of the two products are
given below. Compute Gross Profit Ratio for each product and the company.

Rs. in Lakhs

Products

Particulars X Y Company

Sales 12 6 18

Production Costs 8 5 13

Sales Volume (Units) 5000 4000 9000

27. Calculate Net Profit Ratio

Sales 5,00,000 Gross Profit 2,00,000 Admin Expenses 50,000
Selling Expenses 40,000 Financial Expenses 20,000 Dividend Received 20,000
Preliminary Expenses Written Off 5000 Provision For Income Tax 15,000

28. Compute (a) Payout Ratio (b) Retained Earnings Ratio

Net Profit 10,000 Provision For Tax 5,000 Preference Dividend 2,000
No.of Equity Shares 3,000 Dividend Per Equity Share 0.40

29. The following information is given about a limited company:

Profit after Tax at 60% Rs.3,00,000 Depreciation Rs.40,000
Market Price of Equity Share Rs.50
Equity Dividend paid at 20% Rs.4,00,000 Equity Capital of Rs.10 per share
Rs.2,00,000 9% Preference Share Capital
Calculate: (a) Dividend Yield on Equity Shares (b) Cover for Preference and Equity Dividend
(c) Earning Per Share (d) Price Earning Ratio

30. From the following you are required to calculate

(a) Return on Capital Employed (b) Return on Shareholders Funds
Share Capital (Rs.10) 8,00,000 Reserves 2,00,000 8%Debentures 2,00,000
Creditors 1,60,000 Total Assets 13,60,000 Profit Before Tax and Interest 2,96,000
Profit After Tax 1,40,000