CA SURAJ SATIJA SS GURU RATIO ANALYSIS

1.Find the current liability from the following:

Current ratio - 2:5
Liquid ratio - 1:5
Prepaid expenses - Nil
Stock - 4,000
(A) 20,000
(B) 40,000
(C) 80,000
(D) 4,000

2.In an organization, profit after interest, tax and dividend on preference shares is 4,00,000.
The number of equity shares is 40,000 and the dividend payout ratio is 40%. The dividend per
share is —
(A) 4
(B) 25
(C) 10
(D) 6

3.From the following information find the value of closing stock —

Stock velocity: 6 months
Gross profit ratio: 25%
Gross profit for the year ended 31st March 2014:1,00,000
Closing stock for the period - 20,000 more than it was in the beginning of the year.
(A) 1,50,000
(B) 1,40,000
(C) 1,60,000
(D) 70,000

4.The net profit of a company is 2,00,000, preference dividend 25,000 and taxes paid 15,000.
Number of equity shares is 1,00,000. The earnings per share (EPS) is -
CA SURAJ SATIJA SS GURU RATIO ANALYSIS

(A) 1.5
(B) 1.6
(C) 2
(D) 1.75

5.The current ratio of Brave Ltd. is 2:1, while quick ratio is 1.8:1. If the current liabilities are
40,000, the value of stock will be -
(A) 12,000
(B) 6,500
(C) 8,000
(D) 10,000

6.In an organization, working capital is 1,00,000 and current ratio 3:1. The value of current
assets is –
(A) 1,50,000
(B) 1,00,000
(C) 50,000
(D) 15,000

7.If price-earnings ratio is 0.05 and earnings per share is 8, the market price of share will be —
(A) 120
(B) 100
(C) 160
(D) 0.40

8.Sun Ltd. has furnished the following relevant data of financial statements as on 31st March,
2016:
Equity share capital 10,00,000
(1,00,000 equity shares of 10 each)
General reserve 2,00,000
15% Debentures 2,80,000
CA SURAJ SATIJA SS GURU RATIO ANALYSIS

Current liabilities 8,00,000

Fixed assets 30,00,000
Current assets 18,00,000
Annual fixed cost excluding interest 2,80,000
Variable cost ratio 60%
Total assets turnover ratio 2.5 times
Tax rate 30%

Earnings per share (EPS) will be —

(A) 31.35
(B) 15.80
(C) 20.00
(D) None of the above

9.The relevant data from financial statements of Ross Ltd. as on 31st March, 2016 is given
below:
Cash 1,50,000
Trade receivables 4,00,000
Investment (short-term) 3,30,000
Stock 25,00,000
Prepaid expenses 50,000
Current liabilities 10,00,000
The quick ratio will be —
(A) 0.88: 1
(B) 0.93: 1
(C) 3.43: 1
(D) 3.1: 1

10.Dec 2016: From the books of Raja & Co., following details as on 31st March, 2016 are
collected:
CA SURAJ SATIJA SS GURU RATIO ANALYSIS

Equity share capital 20,00,000

Retained earnings 10,00,000
10% Debentures 20,00,000
Current liabilities 10,00,000
Profit before interest & tax 12,00,000
Interest 1,60,000
Tax 3,12,000
The rate of return on capital employed will be —
(A) 30%
(B) 24%
(C) 14.56%
(D) 17.76%

11.The net profit margin of Rose Ltd. is 8%, its total assets are 6,00,000 and the return on
investment is 18%. Total assets turnover will be —
(A) 2.05
(B) 3.15
(C) 2.25
(D) None of the above

12.Working capital ratio is also known as:

(A) Quick ratio
(B) Current ratio
(C) Debt equity ratio
(D) Liquidity ratio

13.For the financial year ended 31st March, 2017, the figures extracted from the balance sheet
of EXE Ltd. are as follow:
Opening stock 29,000
CA SURAJ SATIJA SS GURU RATIO ANALYSIS

Closing stock 31,000

Cost of goods sold 2,40,000
The stock turnover ratio will be:
(A) 12 times
(B) 10 times
(C) 8 times
(D) 9 times

14.Debt service coverage ratio is obtained by dividing net profit before interest and taxes by:
(A) Taxes
(B) Income
(C) Equity
(D) Interest charges

15.Working capital will not change if there is:

(A) Increase in current assets
(B) Payment to the creditors
(C) Decrease in current liabilities
(D) Decrease in current asset

16.Long term solvency is indicated by:

(A) Debt equity ratio
(B) Proprietary ratio
(C) Fixed assets ratio
(D) All of the above

17.Which of the following is nor an objective of Management Accounting?

(A) To formulate planning and policy
(B) To provide report
(C) To determine the selling price
CA SURAJ SATIJA SS GURU RATIO ANALYSIS

(D) To assist in decision-making process

18.If Working Capital is 24 Lakh, Total Debt is 52 Lakh and Long-term Debt is 40 Lakh, then
current ratio will be:
(A) 2:1
(B) 3:1
(C) 0.6:1
(D) 1.9:1

19.If Stock, Current Assets and Working Capital are 25 lakh, 80 lakh and 30 lakh respectively,
then liquid ratio will be:
(A) 2.67:1
(B) 1.45:1
(C) 1.83:1
(D) 1.1:1

20.If current ratio is 2.5: 1 and Working Capital is 120 Lakh, then current liabilities are:
(A) 48 Lakh
(B) 200 Lakh
(C) 80 Lakh
(D) 180 Lakh

21.Current Ratio is 2.5:1 and Liquid Ratio is 1 5:1. If inventory is 9,60,000, then the amount of
current assets will be:
(A) 9.6 Lakh
(B) 14.40 Lakh
(C) 24 Lakh
(D) 38.40 Lakh

22.Cost of Goods Sold is 90 Lakh, Purchases are 96 Lakh and Closing Stock is 18 Lakh, then
Stock Turnover Ratio will be:
CA SURAJ SATIJA SS GURU RATIO ANALYSIS

(A) 5 times
(B) 6 times
(C) 6.4 times
(D) 4.29 times

23.If Market Price per share, Earning per share and Dividend per share are 150, 16.50 and 15
respectively, then Price Earnings Ratio will be:
(A) 10 times
(B) 9.09 times
(C) 1.1 times
(D) 0.91 times

24.Dividing net credit sales by average debtors would yield .......

(A) Current ratio
(B) Return on sales ratio
(C) Debtors turnover ratio
(D) Average receivables

25.ABC Ltd. Has earned 12% returns on total assets of 8,00,000 and has a net profit ratio of
8%. Sales of the firm shall be:
(A) 96,000
(B) 6,40,000
(C) 12,00,000
(D) 7,36,000

26.9% preference shares of 10 each 4,00,000, Equity shares of 10 each 12,00,000, Profit after
tax 4,20,000, Equity dividend paid 20%, Market price of equity shares 25 each. What will be the
earnings per share?
(A) 3.50
(B) 3.20
(C) 5.40
CA SURAJ SATIJA SS GURU RATIO ANALYSIS

(D) 9.60

27.The average creditors are 74,000, creditors turnover ratio is 4.80. amount of credit
purchase will be:
(A) 15,417
(B) 3,52,500
(C) 3,55,200
(D) None of the above

28.What will be the amount of stock if the current ratio is 2:1 and quick ratio is 1.5.1 and
current liabilities are 90,000?
(A) 55,000
(B) 1,80,000
(C) 1,35,000
(D) 45,000

29.A company has an inventory of 58,400, Debtors of 48,000 and inventory turnover 6 times.
The gross profit margin is 20% on sales and its credit sales are 40% of the total sales. What will
be the credit sales?
(A) 3,50,400
(B) 3,53,440
(C) 4,38,000
(D) 1,75,200

30.The following information is given for X Ltd.:

Stock velocity 3.75 months, Gross profit 80,000 being 20% of sales. The closing stock of the
year is 25,000 more than opening stock. What will be the amount of opening stock and closing
stock?
(A) 1,00,000 and 1,25,000
(B) 80,000 and 1,05,000
(C) 87,500 and 1,12,500
(D) 85,000 and 1,10,000
CA SURAJ SATIJA SS GURU RATIO ANALYSIS

31.A company has the following Current Assets;

Cash 40,000
Marketable securities 25,000
Debtors 20,000
Inventory 18,000
Total current liabilities were 65,400 (including the future tax liability of 4,800 which will be
made after one year). What will be the quick ratio of the company?
(A) 1.40:1
(B) 1.81:1
(C) 1.57:1
(D) 1.30:1

32.Closing debtors are 8,00,000 which are 125 percent of opening debtors. Cash sales are 25
per cent of total sales. If the debtor's turnover ratio is 4 times then the amount of total sales
will be
(A) 36,00,000
(B) 28,80,000
(C) 38,40,000
(D) 48,00,000

ANSWERS KEYS:

1 a 2 a 3 c 4 b 5 c
6 a 7 d 8 a 9 a 10 b
11 c 12 b 13 c 14 d 15 b
16 d 17 c 18 b 19 d 20 c
21 c 22 a 23 b 24 c 25 c
26 b 27 c 28 d 29 d 30 c
31 a 32 c 33 34 35
CA SURAJ SATIJA SS GURU RATIO ANALYSIS

SOLUTION
20.
Current Assets
Current ratio = Current liabilities
𝑋
2.5 = 𝑌

2.5y = x
Working capital = Current Assets - Current liabilities
120 lakh = 2.5y - y
120 lakh = 1.5y
y = Current liabilities = 80 lakh

21.
Current Assets
Current ratio = Current liabilities
𝑋
2.5 = 𝑌

2.5y = x
Current Assets−Stock
Liquid ratio = Current liabilities

2.5𝑦 −9,60,000
1.5 = y

1.5y = 2.5y – 9,60,000

Y = 9,60,000
X= 9,60,000 × 2.5 = 24,00,000

23.
Market Price 150
P/E Ratio = = 16.5 = 9.09
EPS

28.
Current Assets
Current ratio = Current liabilities
𝑋
2 = 90,000
CA SURAJ SATIJA SS GURU RATIO ANALYSIS

X = 1,80,000
Current Assets−Stock
Liquid ratio = Current liabilities

1,80,000−Stock
1.5 = 90,000

1,35,000 = 1,80,000 – Stock

Stock = 45,000

30.
Sales = 80,000/20% = 4,00,000
Cost of goods sold = 4,00,000 - 80,000 =- 3,20,000
Opening Stock = x
Closing Stock = x + 25,000
Average Stock = (x + x + 25,000)/2
Average Stock = (2x + 25,000)/2
Average Stock = x + 12,500
Average Stock
Stock Velocity = Cost of goods sold × 12

x+12,500
3.75 = × 12
3,20,000

12,00,000 = 12x + 1,50,000

X = Opening Stock = 87,500
Closing Stock = 87,500 + 25,000 = 1,12,500

31.
Quick Ratio = 40,000 + 25,000 + 20,000/65,400 - 4,800
85,000/60,600 = 1.40