Financial Statements

Ratios

Easy

Comprehension:

Answer the next 5 questions from the passage-

Following information is provided about a Firm:

Share Capital :

Equity (Rs.10) Rs. 4,00,000

12% Preference Rs. 1,00,000

General Reserve Rs. 1,84,000

10% Debentures Rs. 4,00,000

Current Liabilities Rs. 1,00,000

Fixed Assets Rs. 9,50,000

Current Assets Rs. 2,34,000

The market price of the share is Rs. 34 and the net profit after tax was Rs. 1,50,000, and the tax had amounted to Rs. 50,000.

Return on Shareholders' Funds

21.93%

19.72%

20.84%

21.07%

✅ Correct Option: 1

Shareholders' Funds:

Equity Share Capital + Preference Share Capital + General Reserve

= Rs. 4,00,000 + Rs. 1,00,000 + Rs. 1,84,000 = Rs. 6,84,000

Return on Shareholders' Funds Formula:

Return on Shareholders' Funds = $\frac{\text{Net Profit After Tax}}{\text{Shareholders' Funds}} \times 100$

= $\frac{1,50,000}{6,84,000} \times 100$

= 21.93%

Note: Net Profit After Tax (Rs. 1,50,000) is used directly without deducting preference dividend, as this ratio measures the overall return generated on the total funds invested by all shareholders (both equity and preference).

2026: 13 May Shift 2

The higher current ratio is not a symbol of strength of a firm, rather it is the sign of:

2022: 20 July Shift 1

Calculate Current Ratio from the following given information.

Liquid Ratio 0.75 : 1

Current Liabilities Rs. 1,80,000

Prepaid Expenses Rs. 20,000

Inventory Rs. 47,250

2026: 24 May Shift 1

X Ltd., has a current ratio of 2:1 and quick ratio of 1.5:1. If excess of current assets over quick assets represented by inventories is Rs. 24,000. Calculate current assets and current liabilities.

2022: 8 Aug Shift 2

What is gross profit ratio?

Gross sales Rs. 7,60,000

Sales returns Rs. 40,000

Net Profit after interest Rs. 40,000

Indirect expenses Rs. 60,000

Interest paid on debentures Rs. 20,000

2025: 13 May Shift 1

If, Total assets = Rs. 3,00,000

Non-current liabilities = Rs. 80,000

Shareholders fund = Rs. 2,00,000

Non-current assets:

Fixed assets = Rs. 1,60,000

Non-current investments = Rs. 1,00,000.

Then, Current Ratio is:

2024

Calculate Trade Payables Turnover Ratio.

Return on Shareholders' Funds

Solution

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