Answer True, (d) A ratio is always expressed as a quotient of one number divided by another. NCERT Solutions for Class 12 Accountancy Part II Chapter 5 Accounting Ratios. The detailed notes by our subject experts help students perform well in the CBSE board exams and competitive exams. Gopal Ltd. was registered with an authorised capital of ₹ 50,00,000 divided into Equity Shares of ₹ 100 each. What do you mean by Ratio Analysis? Calculate Operating Profit Ratio. Answer False. TS Grewal Solutions for Class 12 Accountancy – Change in Profit-Sharing Ratio Among the Existing Partners (Volume I) Question 1. ‘ Calculate Current Ratio after payment. CBSE Class 12 Biology (i) The following groups of ratios primarily measure risk Calculate Gross Profit Ratio. 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. Management wish to know how effectively the resources are being utilised Consequently, they are interested in Activity Ratios and Profitability Ratios like Net Profit Ratio, Debtors Turnover Ratio, Fixed Assets Turnover Ratios, etc. 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. 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. For measuring the long term solvency of any business we calculate the following ratios. 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 = Current Assets/Current Liabilities Or Calculate Debt to Equity Ratio. If inventory is liquid, the quick ratio is a preferred measure of overall liquidity. Compute amount of goods that should be purchased on credit. 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. Question 2. (iv) Stock Turnover Ratio (v) Fixed Assets Turnover Ratio. All solutions have been prepared by Class 12 Accountancy teachers at Studiestoday.com. that can be asked in the final exam. (c) debt (d) profitability The rate of tax was 20%. 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. 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. Case 4: Cost of Revenue from Operations or Cost of Goods Sold ₹4,50,000; Gross Profit on Sales 20%; Cash Sales 25% of Net Credit Sales, Opening Trade Receivables ₹90,000; Closing Trade Receivables ₹60,000. Current Assets ₹ 3,00,000; Current Liabilities ₹ 1,00,000. Answer (c) Lenders and suppliers, (vi) The……………….. ratios provide the information critical to the long-run operation of the firm Answer False, (b) Analyses of data provided in the financial statements a is termed as financial analysis. Current Assets are ₹ 7,50,000 and Working Capital is ₹ 2,50,000. You are able to collect the following information about a company for two years NCERT Solutions Class 12 Accountancy 2 Chapter 5 Accounting Ratios. Additional Information: Net Profit before Tax for the year 2018-19 is rs 9,72,000. Limitations of Ratio Analysis: i. Calculate Current Ratio if Stock is ? Included in this category are current ratio, Quick ratio and Cash Fund Ratios. MCQ Questions for Class 12 Accountancy with Answers were prepared based on the latest exam pattern. Opening Trade Receivables = Closing Trade Receivables − Excess of Closing Trade Receivables over Opening Trade Receivables.]. This will clear students doubts about any question and improve application skills while preparing for board exams. It paid Current Liabilities of ₹1,00,000 and the Current Ratio became 2:1. 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. […] Revenue from Operations: Cash Sales ₹5,20,000; Return ₹20,000. Total Assets ₹22,00,000; Fixed Assets ₹10,00,000; Capital Employed ₹20,00,000. From the following, ₹2,00,000 is the Cost of Revenue from Operations (Cost of Goods Sold), during the year. Calculate Current Ratio after the purchase. Accountancy MCQs for Class 12 Chapter Wise with Answers PDF Download was Prepared Based on Latest Exam Pattern. (ii) Revenue from Operations, Cash Sales ₹4,00,000; Credit Sales ₹1,00,000; Gross Profit ₹1,00,000; Office and Selling Expenses ₹50,000. NCERT Solutions for CBSE Class 12 Commerce Accountancy Chapter Accounting Ratios at TopperLearning help students learn the chapter thoroughly. Opening Inventory was 10% of Cost of Revenue from Operations. 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. 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. The significance of ratios to the above mentioned users is as follows 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. (a) Inventory Turnover (b) Debtor Turnover 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. The following is the summarised Profit and Loss account and the Balance Sheet of Nigam Limited for the year ended March 31, 2007, Calculate Following is the Balance Sheet of Crescent Chemical Works Limited as at 31st March, 2019: (b) Short-term Provisions: Provision for Tax. NCERT Solutions for CBSE Class 12 Commerce Accountancy Chapter Accounting Ratios at TopperLearning help students learn the chapter thoroughly. Question 8. 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). Accounting ratios are used as an important tool of analysing the financial performance of the company over the yearsansdas comparative position among other companies in the industry. Chapter 4 Accounting Ratios. Current Liabilities of a company are  ₹ 6,00,000. Helpful in Forecasting: Accounting ratios are very helpful in forecasting and preparing the plans for the future. If the collection period is 36 days and year is assumed to be 360 days, calculate:(i)   Trade Receivables Turnover Ratio;(ii)  Average Trade Receivables;(iii) Trade Receivables at the end when Trade Receivables at the end are more than that in the beginning by ₹ 6,000. 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. Calculate (i) Gross Profit Ratio (ii) Current Ratio (iii) Acid Test Ratio Calculate stock Turnover Ratio, (i) The………..is useful in evaluating credit and collection policies. RD Sharma class 12 Solutions 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. It is expressed in number of times. It signifies the credit period enjoyed by the firm in paying creditors. Case 3: Cost of Revenue from Operations or Cost of Goods Sold ₹3,00,000; Gross Profit on Cost 25%; Cash Sales 20% of Total Sales; Opening Trade Receivables ₹50,000; Closing Trade Receivables ₹1,00,000. Total assets include all assets, including Goodwill. Compute amount of the Current Liabilities that should be paid so that the Current Ratio at the level of 2:1 may be maintained. Management is always interested in future growth of the organisation. From the following Statement of Profit and Loss for the year ended 31st March, 2019 of Rex Ltd., calculate Inventory Turnover Ratio: STATEMENT OF PROFIT AND LOSSfor the year ended 31st March, 2019, (b) Change in Inventory of Stock-in-Trade. (iv) Credit Purchase ₹1,60,000. XYZ Limited's Inventory is ₹3,00,000. Total Assets ₹12,50,000; Total Debts ₹10,00,000; Current Liabilities ₹5,00,000.Calculate Debt to Equity Ratio. The liquidity of a business firm is measured by its ability to satisfy its long term obligations as they become due? 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%. Solution : Current Ratio = Current Assets / Current Liabilities. 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Working Capital  ₹  3,60,000; Total :Debts  ₹ 7,80,000; Long-term Debts ₹ 6,00,000; Inventories  ₹ 1,80,000. Study Materials > > > Career Class 10 Class 12 > Medical Engineering MBA NCERT Solutions for Class 12 Accountancy Part II Chapter 5 Accounting Ratios. (a) Activity (b) Liquidity myCBSEguide has just released Chapter Wise Question Answers for class 12 Accountancy. Gopal Ltd. was registered with an authorised capital of Rs.50,00,000 divided into Equity Shares of Rs.10 each. (c) solvency (d) profitability Question 2. 2,00,000. Management is always interested in future growth of the organisation. What relationships will be established to study? 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. Ratios simply mean one number expressed in terms of another. From the following compute Current Ratio: Calculate Current Ratio from the following information: Current Ratio is 2.5, Working Capital is ₹ 1,50,000. Definition and formulae of all type of ratio finding techniques are given in chapter 5 of class 12 accounts part 2. 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. Calculate Operating Ratio from the following information:Operating Cost ₹ 6,80,000; Gross Profit 25%; Operating Expenses ₹ 80,000. Interest Coverage Ratio: This ratio deals only with servicing of return on loan as interest. (a) liquidity, activity and profitability A firm had Current Assets of ₹5,00,000. Non-operating Expenses ₹2,000; Non-operating Income ₹22,000. Shaalaa.com has the CBSE Class 12 Accountancy - Analysis of Financial Statements solutions in a manner that help students grasp basic concepts better and faster. The functional ratios are further divided into the following categories 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. A high Interest Coverage Ratio implies that the company can easily meet all its interest obligations out of its profit. Chapter 4 Accounting Ratios. The company offered for public subscription all the shares. Determine Current Liabilities and Working Capital before and after the payment was made. How would you study the solvency position of the firm? Debt Equity Ratio :Debt Equity Ratio indicates the relationship between the external equities or outsiders funds and the internal equities or shareholders funds. Discuss the importance of current and liquid ratio. (d) current ratio and average collection period Quick assets are those assets which can get converted into cash easily in case of emergency. (g) Purchases of Stock-in-Trade for cash. A very high current ratio is not a good sign as it reflects under utilisation or improper utilisation of resources. Question 7. Net Profit before Interest and Tax ₹2,50,000; Capital Employed ₹10,00,000. Calculate the current assets and current liabilities. There are two different ways to measure the liquidity of a firm first through current ratio of the firm and second through quick ratio of the firm. 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. Inventory Turnover Ratio 5 times; Cost of Revenue from Operations (Cost of Goods Sold) ₹ 18,90,000. The formula for calculating this ratio is as follows 5,60,000 current ratio is 5 : 2 and quick ratio is 2 : 1. This will clear students doubts about any question and improve application skills while preparing for board exams. Question 20. Current Ratio is 4 : 1. Following is the Balance Sheet of Rohit and Company as on March 31, 2006. Answer Financial ratios help their users to take various managerial decisions. Handa Limited has stock of Rs. Chapter 5 Accounting Ratios. Stock turnover ratio = 6 times Opening Inventory ₹80,000; Purchases ₹4,30,900; Direct Expenses ₹4,000; Closing Inventory ₹1,60,000; Administrative Expenses ₹21,100; Selling and Distribution Expenses ₹40,000; Revenue from Operations, i.e., Net Sales ₹10,00,000. Question 15. Check the below NCERT MCQ Questions for Class 12 Accountancy Chapter 10 Accounting Ratios with Answers Pdf free download. Accounting ratios are widely used for such comparisons. Revenue from Operations (Net Sales) ₹ 1,00,000; cost of Revenue from Operations (Cost of Goods Sold) was 80% of sales; Equity Share Capital ₹ 7,00,000; General Reserve ₹ 3,00,000; Operating Expenses ₹ 10,000; Quick Assets ₹ 6,00,000; 9% Debentures ₹ 5,00,000; Closing Inventory ₹ 50,000; Prepaid Expenses ₹ 10,000 and Current Liabilities ₹ 4,00,000. Sales is Rs. NCERT Solutions for Class 12th Maths The net profits are obtained after deducting income-tax and, generally, non-operating expenses and incomes are excluded from the net profits for calculating this ratio. Hence operating profit ratio will be helpful in that case. (i) Purchases of Stock-in-Trade ₹50,000. Calculate the amount of gross profit The primary emphasis of each of these groups in evaluating these ratios are as follows Calculate Stock Turnover Ratio from the data given below. Its Current Ratio is 2.5 : 1 and Quick Ratio is 1 : 1. (i) Sale of FIxed Assets (Book Value of ₹50,000) for ₹60,000. The formula for calculating Debtors turnover ratio is as follows, (c)Creditors/Payables Turnover Ratio :It compares creditors with the total credit purchases. 76,250, Closing Stock is 98,500, Sales is Rs. 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. These are the management, investors, long term creditors and short term creditors. 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. Compute Gross Profit Ratio from the following information:Cost of Revenue from Operations (Cost of Goods Sold) ₹5,40,000; Revenue from Operations (Net Sales) ₹6,00,000. Calculate Net Profit Ratio. 9,00,000. 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. 2,60,000 and Sales Return is Rs. RBSE Solutions for Class 12 Sanskrit; RBSE Class 11; RBSE Solutions for Class 12 Accountancy Chapter 11 Ratio Analysis. 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. Solved Accounting Ratios with Balance Sheet(vertical) and Statement of Profit and Loss - Cbse Class 12 Accountancy Project And for calculating Security of Return on Debt we calculate Interest Coverage Ratio. Gross profit would be the difference between net sales and cost of goods sold. 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. (ii) Students mostly get confused in operating ratio and operating profit ratio, so be careful while doing these ratios. 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. Question 6. Inventory Turnover Ratio 8 times; Inventory in the beginning is 2 times more than the inventory at the end. I 2019 Solutions for Class 12 Accountancy Chapter 2 - Accounting for Partnership Firms-Fundamentals CBSE Class 12 Accountancy TS Grewal-II (2019) Solutions are created by experts of the subject, hence, sure to prepare students to score well. 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. From the following information, calculate Gross Profit Ratio: Calculate Gross Profit Ratio from the following data: Average Inventory ₹3,20,000; Inventory Turnover Ratio 8 Times; Average Trade Receivables ₹4,00,000; Trade Receivables Turnover Ratio 6 Times; Cash Sales 25% of Net Sales. Closing Trade Receivables ₹ 4,00,000; Cash Sales being 25% of Credit Sales; Excess of Closing Trade Receivables over Opening Trade Receivables ₹ 2,00,000; Revenue from Operations, i.e., Revenue from Operations, i.e., Net Sales ₹ 15,00,000. What are liquidity ratios? Current liabilities of a company are ? Calculate Trade Receivables Turnover Ratio. (iii) Return on Investment. Working Capital is ₹ 9,00,000; Trade payables ₹ 90,000; and Other Current Liabilities are ₹ 2,10,000. (i) Debt Equity Ratio (ii) Working Capital Turnover Ratio Trade Receivables at the end is ₹ 7,000 more than that in the beginning. (c) Goods purchased for ₹ 80,000. 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. 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. From the following calculate: (i) Current Ratio; and (ii) Quick Ratio: Calculate Debt to Equity Ratio: Equity Share Capital ₹ 5,00,000; General Reserve ₹ 90,000; Accumulated Profits ₹ 50,000; 10% Debentures ₹ 1,30,000; Current Liabilities ₹ 1,00,000. (c) current ratio, inventory Operating expenses normally include (a) administrative and office expenses and (b) selling and distribution expenses. (f) Bills Receivable endorsed to a Creditor dishonoured. X Ltd. has Current Ratio of 4.5 : 1 and a Quick Ratio of 3 : 1. Calculate Trade payables Turnover Ratio from the following information:Opening Creditors ₹ 1,25,000; Opening Bills Payable ₹ 10,000; Closing Creditors ₹ 90,000; Closing bills Payable ₹ 5,000; Purchases ₹ 9,50,000; Cash Purchases ₹ 1,00,000; Purchases Return ₹ 45,000. The purpose of this ratio is to indicate the percentage of the owner’s funds invested in fixed assets. 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. 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. In this regard management design various policy measures and draft future plans. In this way they are interested in knowing Earnings per Share, Return on Investment and Return on Equity. 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. 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. (c) liquid ratio (d) current ratio (iv) Short Term Creditors: Short term creditors are those creditors who provide financial assistance through short term credit (Generally less than one year). Chapter 5 Cash Flow Statement. (c) average collection period (d) current asset turnover Public applied for 45,000 shares and allotment was made to all the applicants. Question 1. Who are the users of financial ratio analysis? It means a ratio 2 : 1 is considered favourable. Selling price = 25% above cost Note :According to the ratio, current asset is less than current liability hence working capital should be negative. Current Assets = Stock + Cash + … 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. Definition and formulae of all type of ratio finding techniques are given in chapter 5 of class 12 accounts part 2. 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. 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. 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