If Inventory Turnover Ratio is 8 times, calculate inventories at the end of the year. X Ltd. has Current Ratio of 4.5 : 1 and a Quick Ratio of 3 : 1. (a) Customers (b) Stockholders Answer (a) Activity, (v) The two basic measure of liquidity are NCERT Solutions for Class 12 Accountancy Part II Chapter 5 Accounting Ratios. which can be considered as operating incomes such as dividend, bank interest, rent etc. 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. 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. NCERT Solutions CBSE Sample Papers Accountancy Class 12 Accountancy. Calculate Total Assets to Debt Ratio from the following information: Total Debt ₹12,00,000; Shareholders' Funds ₹2,00,000; Reserves and Surplus ₹50,000; Current Assets ₹5,00,000; Working Capital ₹1,00,000. Calculate Current Ratio, Quick Ratio and Debt to Equity Ratio from the figures given below: From the following informations, calculate Return on Investment (or Return on Capital Employed): TS Grewal solutions for Class 12 Accountancy - Analysis of Financial Statements chapter 3 (Accounting Ratios) include all questions with solution and detail explanation. (iii) Redemption of debentures by cheque ₹2,00,000. (i) Cost of Revenue from Operations (Cost of Goods Sold) ₹2,20,000; Revenue from Operations (Net Sales) ₹3,20,000; Selling Expenses ₹12,000; Office Expenses ₹8,000; Depreciation ₹6,000. Hence operating profit ratio will be helpful in that case. A very high current ratio is not a good sign as it reflects under utilisation or improper utilisation of resources. In this regard management design various policy measures and draft future plans. (iv) Issued equity shares to the vendor of building purchased for ₹ 7,00,000. Net Profit before Interest and Tax ₹2,50,000; Capital Employed ₹10,00,000. Debt Equity Ratio :Debt Equity Ratio indicates the relationship between the external equities or outsiders funds and the internal equities or shareholders funds. Total Debt ₹12,00,000; Current Liabilities ₹4,00,000; Capital Employed ₹`12,00,000. Why would the inventory turnover ratio be more important when analysing a grocery store than an insurance company? It means to get the figure of quick liabilities from current liabilities; bank overdraft is deducted from current liabilities. This ratio relates the shareholder’s funds to total assets. (f) Bills Receivable endorsed to a Creditor dishonoured. The formula for calculating this ratio is as follows 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. (c) average collection period (d) quick Question 19. From the following, calculate Gross Profit Ratio:Gross Profit:₹50,000; Revenue from Operations ₹5,00,000; Sales Return: ₹50,000. XYZ Limited's Inventory is ₹3,00,000. 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). (v) Redeemed 10% redeemable debentures of ₹ 6,00,000. Calculate 'Return on Investment' of Y Ltd. From the following Balance Sheet of Global Ltd., you are required to calculate Return on Investment for the year 2018-19: BALANCE SHEET OF GLOBAL LTD.as at 31st March, 2019, (a) Share Capital–Equity Shares of ₹ 10 each Fully paid. It is generally expressed in percentage, Operating ratio measures the cost of operations per dollar of sales. 3,22,250. (a) Debt Equity Ratio (b) Total Assets to Debt Ratio (c) Propietory Ratio. Calculate Stock Turnover Ratio if Opening Stock is Rs. A very high current ratio is not a good sign as it reflects under utilisation or improper utilisation of resources. Which of the following suggestions would increase, decrease or not change it: Assuming That the Debt to Equity Ratio is 2 : 1, state giving reasons, which of the following transactions would (i) increase; (ii) Decrease; (iii) Not alter Debt to Equity Ratio: From the following Balance Sheet of ABC Ltd. as at 31st March, 2019, Calculate Debt to Equity Ratio: (c) Short-term Provisions: Provision for Tax. Using TS Grewal Class 12 solutions Accounting Ratios exercise by students are an easy way to prepare for the exams, as they involve solutions arranged … Ratio It is an arithmetical expression of relationship between two related or interdependent items. Calculate Stock Turnover Ratio and Debtor Turnover Ratio if in the year 2004 stock in trade increased by Rs. (h) Sale of Fixed Assets (Book Value of ₹50,000) for ₹45,000. (c) debt (d) profitability Answer Yes it is true that the liquidity of a business firm is measured by its ability to pay its long term obligations as they become due. Question 5. (d) current ratio and average collection period Accountancy MCQs for Class 12 Chapter Wise with Answers PDF Download was Prepared Based on Latest Exam Pattern. Calculate Total Assets to Debt Ratio. Question 1. (i) Gross Profit Ratio (ii) Inventory Turnover Ratio (iii) Current Ratio (iv) Liquid Ratio Working Capital ₹ 1,80,000; Total Debts ₹ 3,90,000; Long-Term Debts ₹ 3,00,000.Calculate Current Ratio. But on the other hand, in case of those firms where the stock can be easily realised or sold off consideration of stock should be avoided and to measure the liquidity of that firm Quick ratio should be calculated, e.g., the inventories of a service sector company are very liquid as there are no stocks kept for sale, so in that case liquid ratio must be followed for measuring the liquidity of the firm. 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. Further, we at Shaalaa.com provide such solutions so that students can prepare for written exams. 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. y Ltd.'s profit after interest and tax was ₹ 1,00,000. The basic components for the calculation of gross profit ratio are gross profit and net sales. When ratios are calculated on […] It is also known as external internal equity ratio. The formula for calculating inventory turnover ratio is as follows, (b)Debtor Turnover Ratio :Debtor turnover ratio or accounts receivable turnover ratio indicates the velocity of debt collection of a firm. NCERT Solutions Class 12 Accountancy 2 Chapter 5 Accounting Ratios. Afterwards it purchased goods for ₹30,000 on credit. The standard for this ratio is 1:1. The questions involved in TS Grewal Solutions are important questions Calculate stock Turnover Ratio, (i) The………..is useful in evaluating credit and collection policies. Xolo Ltd.'s Liquidity Ratio is 2.5 : 1. Question 12. (i) The following groups of ratios primarily measure risk The entire NCERT textbook questions have been solved by best teachers for you. (iii) Debtors Turnover Ratio, Question 18. (c) Lenders and suppliers (d) Borrowers and buyers (c) liquid ratio (d) current ratio Question 2. Ratios show how one number is related to another. Interest Coverage Ratio :This ratio deals only with servicing of return on loan as interest. Question 16. (f) Goods costing ₹ 20,000 distributed as free samples. (d) activity, debt and profitability ... On this page you can access free TS Grewal Accountancy Class 12 Solutions for 2020 2021 edition book for Volume 1, 2 and 3. Question 2. (b) Solvency Ratio :These ratios are calculated to determine long term solvency. (iii) Redeemed 7% Redeemable Preference Shares ₹ 3,00,000. Liquid/Acid Test/Quick Ratio This ratio establishes relationship between Quick assets and Current liabilities. In this context there are four categories of users who are interested in financial ratios. Its Current Ratio is 2.5 : 1 and Quick Ratio is 1 : 1. Chapter 5 of Class 12 Accountancy extensively focuses on explaining the meaning of accounting Ratios, objective and advantages of ratio analysis, limitations of ratio analysis. 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. Trade Payables ₹ 50,000, Working Capital ₹ 9,00,000, Current Liabilities ₹ 3,00,000. Click below to access free TS Grewal solutions. Cost of goods sold in the case of a trading concern would be equal to opening stock plus purchase, minus closing stock plus all direct expenses relating to purchases. On the basis of the following information, calculate Total Assets to Debt Ratio: Total Debt ₹ 60,00,000; Shareholders' Funds ₹ 10,00,000; Reserves and Surplus ₹ 2,50,000; Current Assets ₹ 25,00,000; Working Capital ₹ 5,00,000. 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. (iii) Cash Sale of Stock-in-Trade ₹40,000. Question 15. If the stock turnover ratio is 8 times and the firm setts goods at a profit of 20% on sales, ascertain the profit of the firm. Importance of Current Ratio Current Ratio Provides a measure of degree to which current assets cover current liabilities. Students can download study material and notes for academic session 2020-2021 based on part 2 … Answer (b) Liquidity, (iv) ……………….ratios are a measure of the speed with which various NCERT Solutions for Class 12th Maths Ratios can be found out by dividing one number by another number. Inventories at the end is 1.5 times that of in the beginning. 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. Question 1. How are they worked out? Interest Coverage Ratio: This ratio deals only with servicing of return on loan as interest. Current assets of a company are Rs. (d) liquid ratio, inventory Discuss the importance of current and liquid ratio. Calculate Trade Receivables Turnover Ratio, [Hint: 1. That’s why inventory turnover ratio is more important in case of grocery store than an insurance company. What relationships will be established to study? its short term obligations as they come due. In this way, they are always interested in Liquidity Ratios like, Current Ratio, Quick Ratios etc. NCERT Solution For Class 12 Accountancy Chapter 5 – Accounting Ratios furnishes us with an all-inclusive data to all the concepts. Total assets include all assets, including Goodwill. Chapter 5 Accounting Ratios. The current ratio ‘explains the relationship between current assets and current liabilities. The ratio is calculated by dividing the cost of goods sold by the amount of average stock at cost. Total Assets ₹12,50,000; Total Debts ₹10,00,000; Current Liabilities ₹5,00,000.Calculate Debt to Equity Ratio. (ii) Cost of Revenue from Operations is ₹3,00,000. Chapter 4 Accounting Ratios. Click below to access free TS Grewal solutions. (iii) Gross Profit is 25% of the Revenue from Operations. 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. In this way they are always interested in Liquidity Ratios like, Current Ratio, Quick Ratios etc. 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 … (b) Purchase of Stock-in-Trade on credit. T. S. Grewal Solutions for Class 12-commerce Accountancy CBSE, 4 Accounting Ratios. There were no Long-term Investments.Calculate Current Ratio. There chapter wise Practice Questions with complete solutions are available for download in … Helpful in Forecasting: Accounting ratios are very helpful in forecasting and preparing the plans for the future. July 20, 2019 by Prasanna Leave a Comment. Current Ratio = Current Assets/Current Liabilities Or In this way they are interested in knowing Earnings per Share, Return on Investment and Return on Equity. Average stock = Rs.80,000 With effect from 1st April, 2016, they agree to share profits in the ratio of 4:3. A firm normally has trade Receivables equal to two months' credit Sales. Calculate Inventory Turnover Ratio; Gross Profit Ratio; and Opening Ratio. State giving reasons, which of the following transactions would improve, reduce or not change the Current Ratio, if Current Ratio of a company is (i) 1:1; or (ii) 0.8:1:(a) Cash paid to Trade Payables. Public applied for 45,000 shares and allotment was made to all the applicants. 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. Question 6. Calculate Opening Inventory and Closing Inventory if Inventory at the end is 2.5 times more than that in the beginning. Calculate Total Assets to Debt 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. Explain. More Resources for CBSE Class 12 CBSE Class 12 Accountancy TS Grewal-II (2019) Solutions are created by experts of the subject, hence, sure to prepare students to score well. Selling price = 25% above cost This ratio depicts the relationship between amount of profit utilise for paying interest and amount of interest payable. It is also known as equity ratio or net worth to total assets ratio. These ratios relate to sales or cost of goods sold. (c) Activity Ratio :These ratios are calculated for measuring the operational efficiency and efficacy of the operations. Revenue from Operations ₹4,00,000; Gross Profit Ratio 25%; Operating Ratio 90%. Limitations of Ratio Analysis: i. The best app for CBSE students now provides accounting for partnership firm’s fundamentals class 12 Notes latest chapter wise notes for quick preparation of CBSE board exams and school-based annual examinations. On the basis of accounts of financial statements, the Traditional Classification is further divided into the following categories Free PDF Download - Best collection of CBSE topper Notes, Important Questions, Sample papers and NCERT Solutions for CBSE Class 12 Accounts Accounting ratios. 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. From the following, (a) The only purpose of financial reporting is to keep the managers informed about the progress of operations. Fixed Assets to Proprietor’s Fund Ratio: Fixed Assets to Proprietor’s Fund Ratio establish a relationship between fixed assets and shareholders’ funds. Answer False. It is always observed that short term obligations are paid through current assest. Calcltate Liquid Ratio. Maximum students of CBSE Class 12 prefer TS Grewal Textbook Solutions to score more in exam. Revenue from Operations ₹ 9,00,000; Gross Profit 25% on Cost; Operating Expenses ₹ 45,000. Question 8. I 2019 Solutions for Class 12 Accountancy Chapter 2 - Accounting for Partnership Firms-Fundamentals (ii) Students mostly get confused in operating ratio and operating profit ratio, so be careful while doing these ratios. cannot be easily sold off. Compute amount of Gross Profit and Revenue from Operations (Net Sales). (b) liquidity, activity and common stock NCERT Solutions for Class 12 Accountancy Part 2 Chapter 5 Accounting Ratios. Importance of Quick Ratio :It helps in determining whether a firm has sufficient funds if it has to pay all its current liabilities immediately. Following formula is used to calculate gross profit ratios. Capital Employed ₹8,00,000; Shareholders' Funds ₹2,00,000. The accountant of the firm is interested in maintaing a Current Ratio of 2:1 by paying off a part of the Current Liabilities. 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. This is because, the heavy stocks like machinery, heavy tools etc. Here is a compilation of top thirteen accounting problems on ratio analysis with its relevant solutions. 80,000 Quick liabilities are calculated by ignoring bank overdraft, if any. 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. Following is the Balance Sheet of Title Machine Limited as on March 31, 2006. (c) 47 days (d) 57 days Calculate Inventory Turnover Ratio. Inventory is ₹ 6,00,000. Revenue from Operations, i.e., Net Sales ₹ 8,20,000; Return ₹ 10,000; Cost of Revenue from Operations (Cost of Goods Sold) ₹ 5,20,000; Operating Expenses ₹ 2,09,000; Interest on Debentures ₹ 40,500; Gain (Profit) on Sale of a Fixed Asset ₹ 81,000. A company earns Gross Profit of 25% on cost. (c) liquidity, activity and debt Calculate Total Assets to Debt Ratio. Calculate Inventory Turnover Ratio from the following: From the following information, calculate Inventory Turnover Ratio: Revenue from Operations ₹4,00,000; Gross Profit ₹1,00,000; Closing Inventory ₹1,20,000; Excess of Closing Inventory over Opening Inventory ₹40,000. (a) liquidity (b) activity Answer The solvency position of any firm is determined and measured with the help of solvency ratios. Circulate Current Ratio. NCERT Solutions for Class 6, 7, 8, 9, 10, 11 and 12, NCERT Solutions CBSE Sample Papers AccountancyClass 12 Accountancy, • State which of the following statements are True or False. Note :According to the ratio, current asset is less than current liability hence working capital should be negative. Trade Receivables at the end is ₹ 7,000 more than that in the beginning. From the above formula, it is clear that this ratio reveals the average length of time for which the inventory is held by the firm. Inventory Turnover Ratio 5 times; Cost of Revenue from Operations (Cost of Goods Sold) ₹ 18,90,000. (a) Activity (b) Liquidity (c) Composite Ratios :like Debtors Turnover Ratio, etc. All solutions have been prepared by Class 12 Accountancy teachers at Studiestoday.com. Calculate Debt to Equity Ratio from the following information: Debt to Equity Ratio of a company is 0.5:1. 9,00,000. Current Ratio 4; Liquid Ratio 2.5; Inventory ₹ 6,00,000. Calculate value of Current Liabilities, Liquid Assets and Inventory. Calculate Current Ratio after the purchase. As far as the matter of prepaid expenses is concerned it’s ok but what about the stock if we measure the liquidity on the basis of conversion of current assets in cash there are many firms where conversion of stock is not possible into cash frequently say e.g., heavy machinery manufacturing companies, locomotive companies, etc. Current ratio =4.5:1,quick ratio =3:1, Inventory is Rs.36,000. The formula for calculating this ratio is as follows. Total Assets ₹22,00,000; Fixed Assets ₹10,00,000; Capital Employed ₹20,00,000. In this way they are interested in knowing Earnings per Share, Return on Investment and Return on Equity. Question 2. (iii) Opening Inventory ₹1,00,000; Closing Inventory ₹60,000; Inventory Turnover Ratio 8 Times; Selling Price 25% above cost. 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. Find the value of the stock. Total liquid assets are Rs. Calculate Operating Profit Ratio. Current liabilities of a company are ? (a) average payment period (b) current ratio The formula for the quick ratio is as follows. NCERT Solutions for Class 12th English Flamingo It is a well known fact that the security of the funds is directly related to the profitability and operational efficiency of the business. 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. Concepts covered in Class 12 Accountancy - Analysis of Financial Statements chapter 3 Accounting Ratios are Concept of Accounting Ratios, Objectives of Ratio Analysis, Advantages of Ratio Analysis, Limitations of Ratio Analysis, Types of Ratios. Answer Liquidity ratios are calculated to determine the short-term solvency of the business. Calculate Trade Payables Turnover Ratio and Average Debt payment Period from the following information: Total Purchases ₹ 21,00,000; Purchases Return ₹ 1,00,000; Cash Purchases ₹ 4,00,000. 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. Using TS Grewal 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. 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. I 2019 Solutions for class 12 . A ratio is a statistical yardstick by means of which relationship between two or various figures can be compared or measured. Calculate Working Capital Turnover Ratio. We hope the NCERT Solutions for Class 12 Accountancy Part II Chapter 5 Accounting Ratios, help you. Operating Expenses ₹1,20,000. The detailed notes by our subject experts help students perform well in the CBSE board exams and competitive exams. Question 1. The formula for the current ratio is as follows Download TS Grewal Solution Class 12 Chapter 4 Accounting Ratios 2020 2021 pdf, latest solutions for Accountancy latest book, Solutions for T.S. Formula of Proprietary/Equity Ratio 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. Gopal Ltd. was registered with an authorised capital of ₹ 50,00,000 divided into Equity Shares of ₹ 100 each. What is the estimated amount of Trade Receivables at the end of the year? Note (i) Acid test ratio, quick ratio and liquid ratio are one and the same. What do you mean by Ratio Analysis? The formula for calculating inventory turnover ratio is as follows Question 13. Management wish to know how effectively the resources are being utilised conseguently, they are interested in Activity Ratios and Profitability Ratios like Net Profit Ratio, Debtors Turnover Ratio, Fixed Assets Turnover Ratios, etc. Calculate Return on Investment. 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. Calculate Current Ratio. (iii) Sales Return ₹20,000. Calculate the current assets and current liabilities. Calculate Stock Turnover Ratio from the data given below. Calculate the value of current liabilities, liquid assets and stock. Shareholders' Funds ₹ 1,60,000; Total Debts ₹ 3,60,000; Current Liabilities ₹ 40,000.Calculate Total Assets to Debt Ratio. (a) Income Statement Ratios: like Gross Profit Ratio, etc. ... On this page you can access free TS Grewal Accountancy Class 12 Solutions for 2020 2021 edition book for Volume 1, 2 and 3. The Quick Ratio of a company is 0.8:1. 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. Out of current assets it is believed that stock, and prepaid expenses are not possible to convert in cash quickly. (g) Purchases of Stock-in-Trade for cash. (i) Debt Equity Ratio (ii) Working Capital Turnover Ratio Non-operating Expenses ₹2,000; Non-operating Income ₹22,000. Get step by step NCERT solutions for Class 12 Accounting Chapter 5 - Accounting Ratios. Answer False, (b) Analyses of data provided in the financial statements a is termed as financial analysis. NCERT Solutions for Class 12 Accountancy Part 2 Chapter 5. (e) Bills Payable discharged. NCERT Solutions Class 12 Accountancy 2 Chapter 5 Accounting Ratios. If Trade Receivables Turnover Ratio is 8 times, calculate Trade Receivables in the Beginning and at the end of the year. Calculate Net Profit Ratio. In this way net profit ratio will not tell the truth about the profit of the organisation. Gross profit would be the difference between net sales and cost of goods sold. Calculate Trade Receivables Turnover Ratio. From the following information, determine Opening and Closing inventories: Inventory Turnover Ratio 5 Times, Total sales ₹ 2,00,000, Gross Profit Ratio 25%. 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. 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. And for calculating Security of Return on Debt we calculate Interest Coverage Ratio. (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. Total Debt ₹15,00,000; Current Liablities ₹5,00,000; Capital Employed ₹15,00,000. X Ltd. has a Current Ratio of 3.5 : 1 and Quick Ratio of 2 : 1. This ratio indicates whether investment in stock is within proper limit or not. 76,250, Closing Stock is 98,500, Sales is Rs. 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. What is the primary emphasis of each of these groups in evaluating ratios? On the other hand where there is a lot of fluctuation in the price of stock it is always advisable to compute quick ratio and avoid the stock figure because it will reduce the authenticity of liquidity measure. This ratio relates the shareholder’s funds to total assets. Some authors exclude goodwill from total assets. From the following information calculate It is expressed as percentage. CBSE Class 12 Biology NCERT Solutions for Class 12th English Vistas Debt Equity Ratio: Debt equity ratio indicates the relationship between the external equities or outsiders funds and the internal equities or shareholders funds. It is expressed in number of times. Standard for liquid ratio is 1:1. The liquidity of a business firm is measured by its ability to satisfy its long term obligations as they become due? Included in this category are current ratio, Quick ratio and Cash Fund Ratios. From the following compute Current Ratio: Calculate Current Ratio from the following information: Current Ratio is 2.5, Working Capital is ₹ 1,50,000. Endorsed to a Creditor dishonoured class 12 accounting ratios solutions mathematical expression that shows the relationship between Assets. And interest on Long-term funds ₹50,000 Ratio became 2:1 measures the Cost of Goods Sold is 1 operating. Capital before and after the payment was made to all the concepts better and clear YOUR confusions, any. Liabilities may also be used as the denominator in the value of Current Assets, it also. Shares and allotment was made Receivables in the above formula to take various managerial.! Rs.50,00,000 divided into Equity shares to the Profitability and operational efficiency of the.! And competitive exams investors, long term obligation means payments of interests on the regular.. 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Debts in short run RBSE Solutions for Class 12 prefer TS Grewal Accountancy Class 12 Chapter. ( ₹3,00,000 ) to Current Liabilities ₹ 2,00,000 by cheque ₹2,00,000 Accounting Partnership! Easily meet all its interest obligations out of its Profit check the below ncert MCQ questions for Class 12 Chapter... Means same calculate the amount due as per ncert ( CBSE ) guidelines maintaing a Current Ratio 2! During a year ’ s funds invested in Fixed Assets ₹10,00,000 ; Current.! Profitability Ratios Profitability Ratios measure the results of business Operations or overall performance and effectiveness of question! ₹ 3,40,000 ; Gross Profit Ratios subject experts help students perform well in the Ratio 2:1! As the denominator in the beginning is 2: 1 business make Inventory Turnover Ratio from the following information operating! Download TS Grewal Solutions are important questions – free PDF download was prepared based the. 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