(i) Debt to equity ratio |
(ii) Working capital turnover ratio |
(iii) Return on investment |
Answer:
(i) Debt to Equity Ratio \[=\frac{Debt*}{Equity\,or\,Shareholders'\,Funds**}=\frac{10,000}{35,000}=0,286\,:\,1\] **Shareholders? Funds = Equity Share Capital + General Reserve + Balance of Statement of Profit and Loss =25,000 + 2,500 + 7,500 = Rs. 35,000 (ii) Working Capital Turnover Ratio =\[\frac{\text{Revenue}\,\text{from}\,\,\text{Operations}\,\text{(Net}\,\text{sales)}}{\text{Working}\,\text{Capital*}}\] \[=\frac{50,000}{2,500}=20\,times\] *Working Capital = Current Assets ? Current Liabilities =10,000 ? 7,500 = Rs. 2,500 Current Assets = Cash + Debtors = 2,750 + 7,250 = Rs. 10,000 Current Liabilities = Creditors = Rs. 7,500 (iii) Return on Investment = \[\frac{\text{Profit}\,\text{before}\,\text{Interest,}\,\text{Tax}\,\text{and}\,\text{Preference}\,\text{Dividend*}}{\text{Capital}\,\text{employed*}}\times 100\] \[\frac{15,900}{45,000}\times 100=35.33%\] *Profit before Tax \[\,=\,\frac{\text{Profit}\,\text{and}\,\text{Tax}}{100-\text{Tax}\,\text{Rate}}\times 100\] \[=\frac{7,500\times 100}{100-50}=\frac{7,500\times 100}{50}=\,Rs.\,15,000\] Profit before Interest and Tax = 15,000 + 900 (Interest on debentures) = Rs. 15,900 **Capital Employed = Equity Share Capital + General Reserve + Balance of Statement of Profit and Loss + 9% Debentures = 25,000 + 2,500 + 7,500 + 10,000 = Rs. 45,000
You need to login to perform this action.
You will be redirected in
3 sec