Ratio Analysis Previous Year Questions
2023
1. Which of the following equations is correct :
(a) Cost of Revenue from Operations = Revenue from Operations + Gross Profit
(b) Cost of Revenue from Operations = Opening Inventory +Net Purchases + Direct Expenses -Closing Inventory
(c) Cost of Revenue from Operations = Opening Inventory + Closing Inventory
(d) Cost of Revenue from Operations = Revenue from Operations Gross Profit
2. From the following information, the Proprietor’s funds’ are:
| Current Asset | ₹ 20,00,000 |
| Non-Current Asset | ₹ 40,00,000 |
| Long Term Borrowing | ₹ 25,00,000 |
| Proprietary Ratio | 25% |
a) ₹ 10,00,000
b) ₹ 14,00,000
c) ₹ 24,00,000
d) ₹ 15,00,000
3. ‘It is a technique which involves regrouping of data by application of arithmetical relationships.’ Identify the technique and state its two advantages.
4. Calculate Gross Profit Ratio from the following information :
Inventory Turnover Ratio : 6 times
Average Inventory : ₹ 4,00,000
Goods are sold at a profit of 25% on cost
5. The Current Ratio of a company is 2 : 1. State giving reasons, which of the following transactions would improve, reduce or not change the ratio :
(a) Purchased goods on credit ₹ 40,000
(b) Sale of furniture of ₹ 8,000 at a loss of ₹ 2,000
(c) Cash received from trade receivables ₹ 15,000
(d) Issued equity shares ₹ 6,00,000
6. ‘These ratios are calculated to measure the short-term solvency of the business.’ Identify the ratios and state the significance of two ratios included in the above category.
7. ______________ ratios are calculated to determine the ability of the business to service its debt in the long run.
(a) Profitability
(b) Solvency
(c) Liquidity
(d) Turnover
8. The ‘Inventory Turnover Ratio’ from the following information will be:
Revenue from Operations ₹ 12,00,000
Average Inventory ₹ 2,00,000
Gross Loss Ratio 20%
(a) 6 times
(b) 5 times
(c) 7 . 2 times
(d) 3 times
9. Calculate revenue from operations of ‘BN Ltd.’ from the following information:
Current Assets ₹ 8,00,000
Quick ratio 1 . 5 : 1
Current Ratio 2 : 1
Inventory turnover ratio 6 times
Goods were sold at a profit of 25% on cost.
10. The operating ratio of a company is 60%. State whether ‘purchase of goods costing ₹ 20,000’ will increase, decrease or not change the operating ratio.
11. The debt equity ratio of M Ltd. is 2 : 1. State with reasons whether the following transactions will increase, decrease or not change the debt equity ratio:
(i) Obtained a loan from ICICI Bank ₹ 1,00,000 payable after 5 Years.
(ii) Purchased machinery for cash ₹ 1,50,000.
(iii) Redeemed 9% debenture ₹ 1,00,000.
(iv) Issued equity shares for purchase of machinery of ₹ 5,00,000 to the vendors.
12. If revenue from operations is ₹ 9,00,000 ; gross profit is 25% on cost and operating expenses are ₹ 90,000, the operating ratio will be :
(a) 100%
(b) 50%
(c) 90%
(d) 10%
13. Which of the following is a tool of Analysis of Financial Statements?
(a) Statement of Profit & Loss
(b) Ratio Analysis
(c) Balance Sheet
(d) Notes to Accounts
14. ‘It is a technique which involves regrouping of data by application of arithmetical relationships.’ Identify the technique and state any two limitations of the technique identified.
15. Which of the following is not a ‘Profitability Ratio’:
(a) Gross Profit Ratio
(b) Return on Investment
(c) Proprietary Ratio
(d) Operating Ratio
16. The Debt-Equity Ratio of a company is 2 : 1. Which of the following transactions will increase the Debt-Equity Ratio ?
(a) Issue of shares ₹ 1,00,000
(b) Issue of 9% debentures ₹ 4,00,000
(c) Issue of bonus shares ₹ 3,00,000
(d) Payment of creditors ₹ 50,000
17. During the year ended 31st March, 2022, Shradha Ltd. earned net profit of ₹ 15,00,000 before interest and tax. The company has a 10% long term debt of ₹ 50,00,000. The tax rate is 40%. The Interest Coverage Ratio of the company will be :
(a) 2 times
(b) 3 times
(c) 1·2 times
(d) 1·5 times
18. Identify and state the significance of any two ratios that are calculated to measure the efficiency of operations of business based on effective utilisation of resources.
19. Calculate Gross Profit Ratio from the following information :
Average Inventory ₹ 1,60,000;
Inventory Turnover Ratio 8 times,
Average Trade Receivables ₹ 2,00,000;
Trade Receivables Turnover Ratio 6 times
Cash Sales 25% of Total Sales.
20. From the following information, calculate Working Capital Turnover Ratio :
Capital Employed ₹ 1,00,000
Non-Current Assets ₹ 80,000
Cost of Revenue from Operations ₹ 3,20,000
Gross Profit Ratio 20%
21. If revenue from operations is ₹ 10,00,000 and gross profit is 25% on cost, cost of revenue from operations will be :
(a) ₹ 2,50,000
(b) ₹ 12,50,000
(c) ₹ 2,00,000
(d) ₹ 8,50,000
22. If the operating ratio of Aman Ltd. is 60%, its operating profit ratio will be :
(a) 100%
(b) 60%
(c) 40%
(d) 160%
23. Which of the following is not a Solvency Ratio ?
(a) Return on Investment
(b) Interest Coverage Ratio
(c) Proprietary Ratio
(d) Total Assets to Debt Ratio
24. ‘These ratios are calculated for measuring the efficiency of operations of business based on effective utilisation of resources.’
(a) Identify the types of ratios being discussed above.
(b) Explain any two ratios of the types of ratios identified in (a) above.
25. Y Ltd. has a Current Ratio of 3.5 : 1 and Quick Ratio of 2 : 1. If excess of current assets over quick assets represented by inventory is ₹ 48,000, calculate current assets and current liabilities.
26. Calculate Debt to Equity Ratio :
Shareholder Funds ₹ 2,00,000
Reserves and Surplus ₹ 1,00,000
Total Debt ₹ 4,00,000
Current Liabilities ₹ 1,00,000
27. The Current Ratio of a company is 2 : 1. State giving reasons which of the following transactions would improve, reduce or not change the ratio :
(a) Purchase of goods for cash ₹ 60,000
(b) Purchase of fixed assets for cash ₹ 2,00,000
(c) Sale of goods costing ₹ 20,000 for ₹ 23,000 on credit
(d) Issue of shares ₹ 10,00,000
28. ‘These ratios are calculated to determine the ability of the business to service its debt in the long run.’
(a) Identify the types of ratios being discussed above.
(b) Explain any two ratios of the types of ratios identified in (a) above.
29. ‘These ratios are calculated to analyse the earning capacity of the business which is the outcome of utilisation of resources employed in the business.
(a) Identify the types of ratios being discussed above.
(b) Explain any two ratios of the types of ratios identified in (a) above.
30. Which of the following statement is incorrect ?
(a) Liquidity ratios are calculated to measure the short term solvency of the business.
(b) Current Ratio is also known as Acid Test Ratio.
(c) Solvency ratios are calculated to determine the ability of the business to service its debt in the long run.
(d) Proprietary ratio expresses the relationship of proprietor’s fund to net assets/ total assets.
31. The current assets of X ltd. are ₹ 2,00,000 and its current liabilities are ₹ 1,50,000. If its working capital turnover ratio is 6 times, its revenue from operations will be :
(a) ₹ 2,00,000
(b) ₹ 3,00,000
(c) ₹ 2,50,000
(d) ₹ 1,50,000
32. ‘It is a technique which involves regrouping of data by application of arithmetical relationships.’ Identify the technique and state its two objectives.
33. From the following information, calculate the value of opening and closing inventory :
(a) Inventory Turnover Ratio – 4 times
(b) Gross Profit = 20% on Revenue from operations
(c) Revenue from operations = ₹ 10,00,000
(d) Opening Inventory is 25% of the inventory at the end.
34. Debt- Equity ratio of Z Ltd. is 2 : 1. State with reason whether the following transaction will improve, decline or will not change the debt equity ratio :
(i) Conversion of 3,00,000, 9% debenture into equity shares.
(ii) Cash received from debtors ₹ 1,00,000.
(iii) Redemption of ₹ 10,00,000, 11% debentures.
(iv) Purchase of goods on credit ₹ 4,00,000.
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