St.

Joseph’s College of Commerce, Bangalore (Autonomous)

PROBLEMS ON RATIO ANALYSIS

1. Calculate Current Assets if Current ratio=2.6:1 and Current liability = Rs. 40,000.
2. Average stock of a firm is Rs. 40,000. Its opening stock is Rs. 5,000 less than the closing
stock. Find out the opening stock.
3. Gross profit ratio 20% on sales. Total gross profit Rs. 1,00,000. Cash sales Rs. 1,20,000.
Average debtors Rs. 95,000. Calculate Debtors turnover ratio.
4. Turn over to fixed assets is 1:1.5 Value of goods sold is Rs. 5,00,000. Compute the value
of fixed assets.
5. Current ratio is 2.5:1; Liquid ratio is 1.5:1; Working capital is Rs. 50,000. Ascertain current
assets and inventory.
6. Gross profit ratio of a firm is 25%. Gross profit is Rs. 1,00,000. Calculate sales.
7. Average stock of a firm is Rs. 1,00,000 and its opening stock is Rs. 10,000 less than closing
stock. Calculate its opening and closing stock.
8. Gross profit on sales is 25%, cost of goods sold is Rs. 4,00,000. Find out the sales.
9. Current Ratio 4.5; Acid test ratio 3; inventory Rs. 24,000. Find out total current liabilities.
10. Given: Current ratio is 3.75; working capital is Rs. 3,57,500. Calculate the amount of
current assets and current liabilities.
11. Cost of goods sold is Rs. 2,40,000; stock turnover 6 times, opening stock is Rs.6,000 more
than closing stock. Calculate closing stock.
12. Assuming the current ratio of a company is 2:1, state in each of the following cases
whether the ratio will improve or decline or will have no change with reasons:
a) Payment of current- liability. b) Purchase of fixed assets for cash. c) Cash collected
from debtors. d) Bills receivable dishonoured.

13. Using the following ratios, complete the balance sheet below:
Total Assets /Net Worth = 3.5
Sales/Inventory = 15
Sales/Fixed Assets = 6
Sales/Debtors = 18
Sales/Current Assets = 8
Current Ratio = 2.5
Annual sales = Rs. 25 lakhs

Balance Sheet as at 31st March 20X1

Particulars Current Previous

Year Year
Assets:
Non-Current Assets
Tangible

Current Assets:
Inventories
Trade Receivables

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Liquid Assets

Total

Equity and Liability:

Net-worth

Non-Current Liabilities: (Long term Debts)

Current Liabilities

Total

14. The following information is given to you.

a) Current Ratio = 2.5
b) Liquidity Ratio = 1.5
c) Net working capital Rs.3,00,000
d) Stock turnover ratio = 6 times (Cost of sales/closing stock)
e) Gross profit Ratio = 20%
f) Fixed Assets turnover ratio = 2 times
g) Average debt collection period = 2 months
h) Fixed assets to Shareholders Net Worth = 1:1
i) Reserve: Share capital = 0.5 :1 .

Draw up a B/S from the above information.

15. From the following information prepare the B/S with as many details as possible:

a) Working capital = Rs. 60,000

b) Current ratio = 2.5
c) Liquid ratio = 1.5
d) Proprietary ratio (Fixed assets: Proprietors Fund) = 0.75 : 1
e) Reserves and surplus = 2/3 of the working capital
f) Bank overdraft = Rs. 10,000
There is no long-term loan or any investments in fictitious asset.

16. Information relating to Navin Traders is given below.

Gross profit ratio = 25%

Net profit ratio = 20%
Sales or inventory ratio = 8 Times
Fixed assets to total current assets = 3 /4
Fixed assets to total capital = 3/2
Capital to total outside liabilities = 2/5
Fixed assets = Rs. 15, 00,000 and Closing stock = Rs. 2, 00,000

With the above information find out:

1) Cost of sales
2) Gross profit

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3) Net Profit
4) Value of Current Assets
5) Amount of Capital
6) Amount of Liabilities
And also prepare the Statement of Profit and Loss for the year.

17. The following is the Statement of Profit and Loss of a concern for the year ending 31st
Dec. 2021:

Particulars Current
Year
Revenue:
Net Sales 5,00,000
Less: Cost of Sales:
Opening Inventory 76,250
Net Purchases 3,15,250
Closing Inventory (98,500)
2,93,000
Factory Expenses 7,000
3,00,000
GROSS PROFIT 2,00,000
Add: Other Income:
Non-operating Income 6,000

2,06,000
Less: Indirect Expenses:
Administrative Expenses 1,10,000
Selling & Distribution Exp 12,000
Non-Operating Exp 9,000
1,31,000

NET PROFIT 75,000

You are required to calculate:

a) Expenses ratios (b) Gross profit ratio (c) Operating ratio (d) Operating profit

e) Net Profit ratio.

18. Your Company has the following earnings last year.

Profit before tax Rs. 20,00,000
Tax Rate 35%
Capital:
a) Equity Shares 30,000 shares of Rs. 100 each Rs. 30,00,000.
b) 10% Preference Shares Rs. 10,00,000.
From the above calculate Earnings per share, given current Market Price per Equity
share is Rs. 200.

19. Calculate the Earnings per share from the following data:

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Equity Share Capital (Rs. 10 per share) Rs. 2,00,000

10% Preference Share Capital (Rs. 10 each) Rs. 1,50,000
Net Profit after deduction of tax Rs. 95,000

Trend Percentages:

Problem No 1: From the following information, prepare a Trend percentage income.

Particulars 31.3.2016 31.3.2017

Sales 10,00,000 8,00,000
Cost of goods sold 6,00,000 4,00,000
Administration, selling and distribution expenses 2,00,000 1,40,000
Other incomes 40,000 20,000
Income tax 1,20,000 1,40,000

Problem No 2: Calculate the Trend percentages from the following figures of X Ltd. taking
2010 as the base: (Rs. in Lakhs)

Year Sales Stock Profit before tax

2010 1,881 709 321
2011 2,340 781 435
2012 2,655 816 458
2013 3,021 944 527
2014 3,768 1,154 672

Problem No 3: From the following data relating to the assets side of the balance sheet of
Kamadhenu Ltd., for the period 31st December 2012 to 31st December 2015. You are required
to calculate the trend percentage taking 2012 as the base year. (Rs. in Thousands)

Assets 2012 2013 2014 2015

Cash 100 120 80 140
Debtors 200 250 325 400
Stock-in-trade 300 400 350 500
Other current assets 50 75 125 150
Land 400 500 500 500

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Building 800 1,000 1,200 1,500

Plant 1,000 1,000 1,200 1,500
2,850 3,345 3,780 4,690

Problem No 4: The balance sheets of Vikram and Co Ltd. for the year 2012, 2013 & 2014
are given below:

Particulars 2012 2013 2014

Fixed Assets (Net) 20,00,000 40,00,000 50,00,000
Investments 8,00,000 10,00,000 12,00,000
Accounts Receivable 2,00,000 8,00,000 9,00,000
Cash and Bank 1,00,000 3,00,000 2,00,000
Inventories 9,00,000 13,00,000 12,00,000
Total Assets 40,00,000 74,00,000 85,00,000
Equity share Capital 12,00,000 24,00,000 28,00,000
12% Preference Share Capital 10,00,000 18,00,000 20,00,000
Reserve Fund 8,00,000 10,00,000 12,00,000
Profit & Loss A/c 4,00,000 6,00,000 8,00,000
Long Term Loans 4,00,000 10,00,000 12,00,000
Creditors 2,00,000 6,00,000 5,00,000
Total Liabilities 40,00,000 74,00,000 85,00,000

Home Work Problems:

1. Average stock of a firm is Rs. 50,000. Its opening stock is Rs. 10,000 less than its
closing stock. Find out the opening and closing stock.
2. Average stock of a firm is Rs. 1,00,000 and its opening stock is Rs. 10,000 less than
closing stock. Calculate its opening and closing stock.
3. Gross profit is 20% on sales, cost of goods sold is Rs. 3,00,000. Find out the Sales.

4. From the following information prepare balance sheet of Arvind & Co. Ltd.

a) Current ratio = 2.5:1

b) Liquid ratio = 1.75:1

c) Fixed assets to shareholders fund = 0.8:1

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d) Working capital is Rs. 24,000

e) Reserve and surplus Rs. 60,000

f) Debtors and cash are in the ratio of 3:1

g) Creditors and bills payable are in the ratio of 4:1

There is no other current or long-term liability.

5. X Ltd. Submits the following:

8% Preference Share Capital Rs. 5,00,000
Equity Share Capital (2,50,000 shares of Rs. 10 each) Rs. 25,00,000
Profit before tax Rs. 14,00,000
Tax rate 40%
Market Price per share Rs. 40

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