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Institutions
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Ratio Analysis

Dr. Bhavik M. Panchasara

Marwadi Education Foundations Group of Institutions

RATIO ANALYSIS - NUMERICAL QUESTION BANK
1. From the following balance sheet of B Ltd., find out all possible ratios and comment on it.
Liabilities
Rs.
Assets
Rs.
Equity share capital
3, 69,000 Fixed Assets
7, 13,400
10% Preference share capital
60,000 Current Assets
2, 70,600
GR
63, 000 Underwriting Commission
12, 300
P & L Account
73, 800
Securities Premium
12, 300
12% Debentures
2, 52, 000
Mortgage loan
86, 200
Current Liabilities
80, 000
9, 96,300

9, 96,300

[CR 3.38,
2. From the following balance sheet of B Ltd., find out all possible ratios and comment on it.
Liabilities
Rs.
Assets
Rs.
Equity share capital
2, 80,000 Goodwill
70, 000
10% Preference share capital
1, 40,000 Land & Buildings
2, 10,000
GR
84, 000 Plant & Machineries
1, 96,000
P & L Account
2, 00,000 Investments
84, 000
12% Debentures
70, 000 Stock
1, 55,000
Sundry Creditors
70, 000 Debtors
70, 000
Bills payables
7, 000 Bills Receivables
14, 000
Outstanding rent
14, 000 Trade Investments
28, 000
Provision for tax
28, 000 Cash in Hands
50, 000
Proposed dividend
40, 000 Prepaid Salaries
5, 600
Preliminary Expenses
50, 400
9, 33,000
9, 33,000
3. Mr. X intends to supply goods on credit to Y Ltd. OR Z Ltd. The relevant financial data relating to the
companies for the year ended 30th June, 2008 are as follows: [Rs. In 000]
Details
Y Ltd.
Z Ltd.
Stock
400
50
Debtors
85
70
Cash
15
30
Trade creditors
150
80
Bank overdraft
20
15
Creditors for expenses
30
5
Total purchases
465
330
Cash purchases
15
10
Terms of payment
3 months 3 months
Advice which company is better for Mr. X to supply the goods.
4. The current assets and current liabilities of your company on 31st December, 2010 were Rs. 20 lakhs and Rs.
10 lakhs respectively. Calculate the effect of each of the following transaction individually and totally and on
the current ratio of the company:
(I) Purchase of new machinery Rs. 5 lakhs by cash.
(II) Purchase of new machinery Rs. 5 lakhs on short term credit.
(III) Purchase of new machinery Rs. 5 lakhs on medium term loan from bank with 20% margin.
(IV) Payment of dividend Rs. 2 lakhs of which Rs. 0.50 lakh was TDS
Ratio Analysis by Dr. Bhavik M. Panchasara

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Marwadi Education Foundations Group of Institutions

5. The comparative balance sheet of a limited company is given for the years ending March 2010 and 2009. [Rs.
In 000]
Liabilities
2009 2010 Assets
2009
2010
Equity share capital
300
400 Goodwill
200
200
Reserve funds
150
280 Land & Building
300
400
8% debentures
200
300 Plant & Machinery
250
350
Mortgage loan
400
258 Patents
50
50
Sundry creditors
50
70 Stock
150
200
Bills payable
25
35 Sundry debtors
100
80
BOD
40
60 Bills receivables
80
90
Outstanding expenses
10
15 Marketable securities
18
20
Tax liabilities
15
20 Cash balance
40
45
Prepaid expenses
2
3
1190 1438
1190
1438
Sales for 2009 and 2010 are 500 and 600 respectively and purchases are 300 and 405 respectively. Take 365
days in a year. Trade debtors include debtors and bills receivables. Trade creditors include creditors and bills
payables.
Find out:
CR, LR, Inventory T/O Ratio, Debtors T/O Ratio, Average Collection Period, Creditors T/O Ratio, Average
Payment Period, Working Capital T/O Ratio.
6. Raju ltd. has drawn up the following P & l Account for the year ended 31st march, 2010.
Particulars
Amounts Particulars
Amounts
To opening stock
2, 600 By sales
16, 000
To purchases
8, 000 By closing stock
3, 800
To wages
2, 400
To manufacturing expenses
1, 600
To GP c/d
5, 200
19, 800
19, 800
To selling & Distribution
By GP b/d
5, 200
expenses
400 By compensation for
480
To administrative expenses
2, 280 acquisition of land
To general expenses
120
To furniture damaged by fire
80
Net profit
2, 800
5, 680
5, 680
You are required to find out the operating ratio and ratio of operating net profit to net sales.
7. Your company had the following details for last year:
PBT is 24.46 lakhs, Tax Rate 60%, Proposed Dividend 20%.
Capital of the company is:
30, 000 equity shares each of Rs. 100, 9% Preference shares Rs. 10 lakhs , Reserve in the beginning of the
year Rs. 22 lakhs.
Find out: EPS, Book Value per share, Earning yield ratio, PE Ratio, Dividend Payment Ratio.
8. From the following information, make out a statement of proprietors funds with as many details possible:
Current Ratio
2.5
Liquid Ratio
1.5
Proprietary Ratio
0.75
Working Capital
60, 000
Reserves & Surplus
40, 000
BOD
10, 000
There are no long term loans or fictitious assets.
Ratio Analysis by Dr. Bhavik M. Panchasara

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Marwadi Education Foundations Group of Institutions

9. From the following Balance sheet of Dipa Ltd., Compute:
(a) Equity Ratio [0.59] (b) Debt Equity Ratio [0.68]
(c) Funded debts to total Capitalization Ratio [0.33]
(d) Fixed Assets to Net Worth Ratio 1.01 (e) Solvency Ratio [0.41] (f) Current Assets to Proprietors Fund
Ratio [0.68] (g) Fixed Assets Ratio [0.67]
Liabilities
Amount
Assets
Amount
Equity Share Capital
3, 00,000 Goodwill
90, 000
9% Preference Share Capital
1, 50,000 Land & Building
1, 00,000
Reserve Funds
50, 000 Plant & Machinery
2, 50,000
P & L A/c
20, 000 Equipments
60, 000
Share Premium
10, 000 Furniture & Fittings
80, 000
8% Debentures
2, 00,000 Sundry debtors
92, 000
6% Mortgage Loan
60, 000 Less: Provisions
2, 000
90, 000
Sundry Creditors
80, 000 Bills Receivables
1, 00,000
Income Tax Provision
20, 000 Stock in hand
1, 20,000
Depreciation Fund
50, 000 Cash balance
45, 500
Prepaid insurance
1, 500
Preliminary Expenses
2, 000
Discount on issue of debentures
1, 000
9, 40,000
9, 40,000
10. From the following information find out 1. Inventory turnover ratio [7.91 times] 2. Financial leverage [2.982]
3. ROI [0.647%] 4. ROE [1.767%] 5. Average Collection Period [22 days]
Particulars
[Rs. In lakhs] Closing Balances Opening Balances
Sources of funds:
2377
1472
Shareholders funds
3570
3083
Loan funds
5947
4555
Application of Funds:
Fixed assets
3466
2900
Cash at banks
489
470
Debtors
1495
1168
Stock
2867
2407
Other current assets
1567
1404
Less: Current Liabilities
(3937)
(3794)
5947
4555
Income Statement
Particulars
[Rs. In lakhs] Closing Balances Opening Balances
Sales
22165
13882
Less: Cost of Goods Sold
20860
12544
Gross profit
1305
1338
Less: Selling & Administrative Expenses
1135
752
EBIT
170
586
Interest Expenses
113
105
PBT
57
481
Tax
23
192
PAT
34
289
11. The ratios relating to Cosmos Ltd. are given as follows:
GPR 15%, Stock Velocity 6 months, Debtors Velocity 3 months, creditors Velocity 3 months, Gross Profit for
the year ending Dec. 31, 2010 is Rs. 60,000, closing stock is equal to Opening Stock. Find out:
Sales [4, 00,000], Closing Stock [1, 70,000], Sundry Debtors [1, 00,000] Sundry Creditors [85, 000]
Ratio Analysis by Dr. Bhavik M. Panchasara

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Marwadi Education Foundations Group of Institutions

12. From the following information, make out Balance Sheet [17, 00,000]
Current Ratio 2.75, Acid Ratio 2.25, Working Capital Rs. 7, 00,000, Reserves & Surplus Rs. 1, 00,000, Total
Current Assets include stock, debtors and cash only which are in the ratio of 2:6:3, Total Current Liabilities
Included creditors and bills payable in the ratio of 3:2, Fixed Assets are 50% of share capital, Share capital is
Rs. 12, 00,000, There are no other items of assets or liabilities.
13. From the following information, make out Balance Sheet [1, 69,000]
Stock Velocity 6, Capital Turnover Ratio 2, Fixed Assets Turnover Ratio 4, Gross Profit Turnover Ratio 20%,
Debtors Velocity 2 months, Creditors Velocity 73 days, Total Gross Profit 60, 000, Reserves & Surplus Rs. 20,
000, Closing Stock Rs. 5, 000 in excess of opening stock.
14. Prepare balance sheet from the following information: [12, 50,000]
Current Ratio 2.5, Fixed Assets Turnover Ratio 2 times, Liquidity Ratio 1.5, Average Debt Collection Period 2
months, Cost of Sales to Closing Stock Ratio 6 times, Fixed Assets to Shareholders Net Worth is 1:1, Gross
Profit Ratio 20%, Reserves to Share capital 0.5:1.
15. The summarized balance sheet for year ending 31st March 2010, 2009 and 2008 are given below:
Liabilities
2010
2009
2008
Paid up capital
200
200
200
Long Term Borrowings:
(I)
From Banks
70
100
130
(II)
From Others
280
350
380
Current Liabilities

50

60

100

TOTAL

600

710

810

Gross block

360

365

370

Less: Depreciation

70

100

120

Net Block

290

265

250

Current Assets

150

200

240

Profit & Loss A/c

160

245

320

Assets:

TOTAL

600
710
810
Find out Debt Equity Ratio [8.75, negative, negative], Working Capital [100, 140, 140], Current Ratio
[3, 3.3, 2.4] and Fixed Assets Ratio [0.74, 0.65, 0.64]
16. Following is the Balance Sheet of Rohit and Co. as on March 31, 2006
Liabilities
Amount
Assets
Rs.
Share Capital
1, 90,000
Fixed Assets
Reserves
12,500
Stock
Profit and Loss
22,500
Debtors
Bills Payables
18,000
Cash at Bank
Creditors
54,000
2, 97,000
Calculate Current Ratio (Ans: Current Ratio 2:1)

Ratio Analysis by Dr. Bhavik M. Panchasara

Amount
Rs.
1, 53,000
55,800
28,800
59,400
2, 97,000

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Marwadi Education Foundations Group of Institutions

17. Following is the Balance Sheet of Title Machine Ltd. as on March 31, 2006.
Liabilities
Amount
Assets
Rs.
Equity Share Capital
24,000
Buildings
8% Debentures
9,000
Stock
Profit and Loss
6,000
Debtors
Bank Overdraft
6,000
Cash in Hand
Creditor
23,400
Prepaid Expenses
Provision for Taxation
600
69,000
Calculate Current Ratio and Liquid Ratio. (Ans: Current Ratio 8:1, Liquid Ratio .37:1)

Amount
Rs.
45,000
12,000
9,000
2,280
720
69,000

18. Current Ratio is 3:5. Working Capital is Rs. 9, 00,000. Calculate the amount of Current Assets and Current
Liabilities. (Ans: Current Assets Rs. 1, 26,000 and Current Liabilities Rs. 36,000)
19. 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. (Ans: Current Liabilities Rs. 1, 08,000, current liabilities Rs. 24,000)
20. Current liabilities of a company are Rs. 75,000. If current ratio is 4:1 and liquid ratio is 1:1, calculate value of
current assets, liquid assets and stock. (Ans: Current Assts Rs. 3, 00,000, Liquid Assets Rs. 75,000 and Stock
Rs. 2, 25,000)
21. Handa Ltd. has stock of Rs. 20,000. Total liquid assets are Rs. 1, 00,000 and quick ratio is 2:1. Calculate current
ratio. (Ans: Current Ratio 2.4:1)
22. Calculate debt equity ratio from the following information: Total Assets Rs. 15, 00,000, Current Liabilities Rs. 6,
00,000, Total Debts Rs. 12, 00,000 (Ans: Debt Equity Ratio 2:1.)
23. Calculate Current Ratio if: Stock is Rs. 6, 00,000; Liquid Assets Rs. 24, 00,000; Quick Ratio 2:1.
(Ans: Current Ratio 2.5:1)
24. Compute Stock Turnover Ratio from the following information: Net Sales Rs. 2, 00,000, Gross Profit Rs. 50,000
Closing Stock Rs. 60,000, Excess of Closing Stock over Opening Stock Rs. 20,000 (Ans: Stock Turnover Ratio 3 times)
25. Calculate following ratios from the following information:
(i) Current ratio (ii) Acid test ratio (iii) Operating Ratio (iv) Gross Profit Ratio
Current Assets Rs. 35,000, Current Liabilities Rs. 17,500, Stock Rs. 15,000, Operating Expenses Rs. 20,000, Sales Rs.
60,000, Cost of Goods Sold Rs. 30,000
(Ans: Current Ratio 2:1; Liquid Ratio 1.14:1; Operating Ratio 83.3%; Gross Profit Ratio 50%)
26. From the following information calculate: (i) Gross Profit Ratio (ii) Inventory Turnover Ratio (iii) Current Ratio (iv)
Liquid Ratio (v) Net Profit Ratio (vi) Working capital Ratio:
Sales Rs. 25, 20,000, Net Profit Rs. 3, 60,000, Cast of Sales Rs. 19, 20,000, Long-term Debt Rs. 9, 00,000, Creditors Rs.
2, 00,000, Average Inventory Rs. 8, 00,000, Current Assets Rs. 7, 60,000, Fixed Assets Rs. 14, 40,000, Current
Liabilities Rs. 6, 00,000, Net Profit before Interest and Tax Rs. 8, 00,000
(Ans: Gross Profit Ratio 23.81; Inventory Turnover Ratio 2.4 times; Current Ratio 2.6:1; Liquid Ratio 1.27:1; Net Profit
Ratio 14.21%; Working Capital Ratio 2.625 times)
27. Compute Gross Profit Ratio, Working Capital Turnover Ratio, Debt Equity Ratio and Proprietary Ratio from the
following information:
Paid-up Capital Rs. 5, 00,000, Current Assets Rs. 4, 00,000, Net Sales Rs. 10, 00,000, 13% Debentures Rs. 2, 00,000
Current Liability Rs. 2, 80,000, Cost of Goods Sold Rs. 6, 00,000
Ratio Analysis by Dr. Bhavik M. Panchasara

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Marwadi Education Foundations Group of Institutions

(Ans: Gross Profit Ratio 40%; Working Capital Ratio 8.33 times; Debt Equity Ratio 2:5; Proprietary Ratio 25:49)
28. Calculate Stock Turnover Ratio if:
Opening Stock is Rs. 76,250, Closing Stock is 98,500, Sales is Rs. 5, 20,000, Sales Return is Rs. 20,000, and Purchases is
Rs. 3, 22,250. (Ans: Stock Turnover Ratio 3.43 times)
29. Calculate Stock Turnover Ratio from the data given below:
Stock at the beginning of the year Rs. 10,000, Stock at the end of the year Rs. 5,000, Carriage Rs. 2,500
Sales Rs. 50,000, Purchases Rs. 25,000 (Ans: Stock Turnover Ratio 4.33 times)
30. A trading firms average stock is Rs. 20,000 (cost). If the stock turnover ratio is 8 times and the firm sells goods at
a profit of 20% on sale, ascertain the profit of the firm. (Ans: Profit Rs. 40,000)
31. You are able to collect the following information about a company for two years:
2004
2005
Book Debts on Apr. 01
Rs. 4, 00,000
Rs. 5, 00,000
Book Debts on Mar. 30
Rs. 5, 60,000
Stock in trade on Mar. 31
Rs. 6, 00,000
Rs. 9, 00,000
Sales (at gross profit of 25%)
Rs. 3, 00,000
Rs. 24, 00,000
Calculate Stock Turnover Ratio and Debtor Turnover Ratio if in the year 2004 Stock in trade increased by Rs. 2,
00,000. (Ans: Stock Turnover Ratio 2.4 times, Debtors Turnover Ratio 4.53 times)
32. The following Balance Sheet and other information, calculate following ratios:
(i) Debt Equity Ratio (ii) Working Capital Turnover Ratio (iii) Debtors Turnover Ratio
Liabilities

Amount
Assets
Rs.
General Reserve
80,000
Preliminary Expenses
Profit and Loss
1, 20,000
Cash
Loan @15%
2, 40,000
Stock
Bills Payable
20,000
Bills Receivables
Creditors
80,000
Debtors
Share Capital
2, 00,000
Fixed Assets
7, 40,000
(Ans: Debt Equity 12:19; Working Capital Turnover 1.4 times; Debtors Turnover 2 times)

Amount
Rs.
20,000
1, 00,000
80,000
40,000
1, 40,000
3, 60,000
7, 40,000

33. The following is the summarized Profit and Loss account and the Balance Sheet of Nigam Limited for the year
ended March 31, 2007:
Expenses/Losses
Amount
Revenue/Gains
Amount
Rs.
Rs.
Opening Stock
50,000
Sales
4, 00,000
Purchases
2, 00,000
Closing Stock
60,000
Direct Expenses
16,000
Gross Profit
1, 94,000
4, 60,000
4, 60,000
Salary
48,000
Gross Profit
1, 94,000
Loss on Sale of Furniture
6,000
Net Profit
1, 40,000
1, 94,000
1, 94,000

Ratio Analysis by Dr. Bhavik M. Panchasara

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Marwadi Education Foundations Group of Institutions

Balance Sheet of Nigam Limited as on March 31, 2007
Amount
Assets
Rs.
Profit and Loss
1, 40,000
Stock
Creditors
1, 90,000
Land
Equity Share Capital
2, 00,000
Cash
Outstanding Expenses
70,000
Debtors
6, 00,000
Calculate (i) Quick Ratio, (ii) Stock Turnover Ratio, (iii) Return on Investment
(Ans: Quick Ratio 7:13; Stock Turnover Ratio 3.74 times; Return on Investment 41.17%)
Liabilities

Amount
Rs.
60,000
4, 00,000
40,000
1, 00,000
6, 00,000

34. From the following, calculate (a) Debt Equity Ratio (b) Total Assets to Debt Ratio (c) Proprietary Ratio.
Equity Share Capital Rs. 75,000, Preference Share Capital Rs. 25,000, General Reserve Rs. 50,000, Accumulated
Profits Rs. 30,000, Debentures Rs. 75,000, Sundry Creditors Rs. 40,000, Outstanding Expenses Rs. 10,000
Preliminary Expenses to be written-off Rs. 5,000
(Ans: Debt Equity Ratio 3:7; Total Assets to Debt Ratio 4:1; Proprietary Ratio 7:12)
35. Cost of Goods Sold is Rs. 1, 50,000. Operating expenses are Rs. 60,000. Sales are Rs. 2, 60,000 and Sales Return is
Rs. 10,000. Calculate Operating Ratio. (Ans: Operating Ratio 84%)
36. The following is the summarized transactions and Profit and Loss Account for the year ending March 31, 2007
and the Balance Sheet as on that date.
Expenses/Losses
Amount
Revenue/Gains
Amount
Rs.
Rs.
Opening Stock
5,000
Sales
50,000
Purchases
25,000
Closing Stock
7,500
Direct Expenses
2,500
Gross Profit
25,000
57,500
57,500
Administrative Expenses
7,500
Gross Profit
25,000
Interest
1,500
Selling Expenses
6,000
Net Profit
10,000
25,000
25,000
Liabilities
Share Capital
Current Liabilities
Profit and Loss

Amount
Rs.
50,000
20,000
10,000

80,000

Assets
Land and Building
Plant and Machinery
Stock
Sundry Debtors
Bills Receivables
Cash in Hand and at Bank
Furniture

Amount
Rs.
25,000
15,000
7,500
7,500
6,250
8,750
10,000
80,000

Calculate (i) Gross Profit Ratio (ii) Current Ratio (iii) Acid Test Ratio (iv) Stock Turnover Ratio (v) Fixed Assets Turnover
Ratio.
(Ans: (i) Gross Profit Ratio 50%; (ii) Current Ratio 3:2; (iii) Acid Test Ratio 1.125:1; (iv) Stock Turnover Ratio 4 times;
(v) Fixed Assets Turnover 1:1)

Ratio Analysis by Dr. Bhavik M. Panchasara

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Marwadi Education Foundations Group of Institutions

37. From the following information calculate Gross Profit Ratio, Stock Turnover Ratio and Debtors Turnover Ratio.
Sales Rs. 3, 00,000, Cost of Gods Sold Rs. 2, 40,000, Closing Stock Rs. 62,000, Gross Profit Rs. 60,000, Opening Stock
Rs. 58,000, and Debtors Rs. 32,000
(Ans: Gross Profit Ratio 20%; Stock Turnover Ratio 4 times; Debtors Turnover Ratio 9.4 times)
38. Current ratio = 4.5:1, quick ratio = 3:1.Inventory is Rs. 36,000. Calculate the current assets and current liabilities.
39. Current liabilities of a company are Rs. 5, 60,000; current ratio is 5:2 and quick ratio is 2:1. Find the value of the
stock.
40. Current assets of a company are Rs. 5, 00,000. Current ratio is 2.5:1 and quick ratio is 1:1. Calculate the value of
current liabilities, liquid assets and stock.
41. Calculate the amount of gross profit:
Average stock = Rs. 80,000, Stock turnover ratio = 6 times, Selling price = 25% above cost
42. Calculate Stock Turnover Ratio:
Annual sales = Rs. 2, 00,000, Gross Profit = 20% on cost of Goods Sold, Opening stock = Rs. 38,500
Closing stock = Rs. 41,500

Ratio Analysis by Dr. Bhavik M. Panchasara

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