Accountancy

If Profit before Interest and Tax is Rs. 5,00,000 and interest on Long-term Funds is Rs. 1,00,000, find Interest Coverage Ratio.

SOLUTION Net Profit before Interest and Tax = 5,00,000Interest = 1,00,000Interest Coverage Ratio = Net Profit Interest and Tax / Interest Interest Coverage Ratio = 5,00,000 / 1,00,000 = 5…

Continue ReadingIf Profit before Interest and Tax is Rs. 5,00,000 and interest on Long-term Funds is Rs. 1,00,000, find Interest Coverage Ratio.

State with reason, whether the Proprietary Ratio will improve, decline or will not change because of the following transactions if Proprietary Ratio is 0.8: 1: (i) Obtained a loan of Rs. 5,00,000 from State Bank of India payable after five years. (ii) Purchased machinery of Rs. 2,00,000 by cheque. (iii) Redeemed 7% Redeemable Preference Shares Rs. 3,00,000. (iv) Issued equity shares to the vendor of building purchased for Rs. 7,00,000. (v) Redeemed 10% redeemable debentures of Rs. 6,00,000.

SOLUTION

Continue ReadingState with reason, whether the Proprietary Ratio will improve, decline or will not change because of the following transactions if Proprietary Ratio is 0.8: 1: (i) Obtained a loan of Rs. 5,00,000 from State Bank of India payable after five years. (ii) Purchased machinery of Rs. 2,00,000 by cheque. (iii) Redeemed 7% Redeemable Preference Shares Rs. 3,00,000. (iv) Issued equity shares to the vendor of building purchased for Rs. 7,00,000. (v) Redeemed 10% redeemable debentures of Rs. 6,00,000.

Calculate Proprietary Ratio from the following: 

ParticularsAmount(Rs.)ParticularsAmount(Rs.)Equity Shares Capital4,50,0009% Debentures3,00,00010% Preference Share Capital3,20,000Fixed Assets7,00,000Reserves and Surplus65,000Trade Investment2,45,000Creditors1,10,000Current Assets3,00,000 SOLUTION Total Assets = Fixed Assets + Trade Investments + Current Assets= 7,00,000 + 2,45,000 + 3,00,000= 12,45,000 Shareholders’…

Continue ReadingCalculate Proprietary Ratio from the following: 

From the following information, calculate Proprietary Ratio:

ParticularsAmount(Rs.)Equity Share Capital3,00,000Preference Share Capital1,50,000Reserves and Surplus75,000Debentures1,80,000Trade Payables45,000 Total7,50,000Fixed Assets3,75,000Short-term Investments2,25,000Other Current Assets1,50,000 Total7,50,000 SOLUTION Total Assets = Fixed Assets + Current Assets + Investments= 3,75,000 + 1,50,000 + 2,25,000= 7,50,000 Shareholders’ Funds…

Continue ReadingFrom the following information, calculate Proprietary Ratio:

From the following information, calculate Proprietary Ratio:

Share Capital3,00,000Reserves and Surplus1,80,000Non-current Assets13,20,000Current Assets6,00,000 SOLUTION Proprietary Ratio = Shareholders' Funds / Total Assets Proprietary Ratio = Share Capital + Reserves and Surplus / Non-Current Assets + Current AssetsProprietary Ratio = (3,00,000+1,80,000) / (13,20,000 + 6,00,000)Proprietary Ratio = 0.25:…

Continue ReadingFrom the following information, calculate Proprietary Ratio:

From the following information, calculate Total Assets to Debt Ratio:

ParticularsAmount(Rs.)ParticularsAmount(Rs.)Fixed Assets (Gross)6,00,000 Accumulated Depreciation1,00,000Non-current Investments10,000 Long-term Loans and Advances40,000Current Assets2,50,000 Current Liabilities2,00,000Long-term Borrowings3,00,000 Long-term Provisions1,00,000 SOLUTION DebtsLong-term Borrowings + Long Term Provisions 3,00,000 + 1,00,000= Rs. 4,00,000  Total Assets   Non-Current Assets + Current Assets  6,00,000 - 1,00,000 + 10,000 + 2,50,000 + 40,000= Rs. 8,00,000  Total Assets to Debt RatioTotal Assets…

Continue ReadingFrom the following information, calculate Total Assets to Debt Ratio:

Total Debt Rs. 12,00,000; Shareholders’ Funds Rs. 2,00,000; Reserves and Surplus Rs. 50,000; Current Assets Rs. 5,00,000; Working Capital Rs. 1,00,000. Calculate Total Assets to Debt Ratio.

SOLUTION Working CapitalCurrent Assets-Current Liabilities1,00,0005,00,000 - Current Liabilities = Rs. 4,00,000  Current Liabilities DebtTotal Debt-Current Liabilities12,00,000 - 4,00,000 = Rs. 8,00,000  Total AssetsShareholders' Funds+ Total Debt                    2,00,000 + 12,00,000 = Rs. 14,00,000  Total Assets to Debt RatioTotal Assets / Debt                                           14,00,000 / 8,00,000 = 1.75: 1

Continue ReadingTotal Debt Rs. 12,00,000; Shareholders’ Funds Rs. 2,00,000; Reserves and Surplus Rs. 50,000; Current Assets Rs. 5,00,000; Working Capital Rs. 1,00,000. Calculate Total Assets to Debt Ratio.

Calculate Total Assets to Debt Ratio from the following information:

ParticularsAmount(Rs.)ParticularsAmount(Rs.)Total Assets15,00,000Bills Payable60,000Total Debts12,00,000Bank Overdraft50,000Creditors90,000Outstanding Expenses20,000 SOLUTION Total Assets =  Rs. 15,00,000Current Liabilities = Creditors + Bills Payable + Bank Overdraft + Outstanding Expenses= 90,000 + 60,000 + 50,000 + 20,000= 2,20,000Long-Term Debt = Total Debt…

Continue ReadingCalculate Total Assets to Debt Ratio from the following information: