Case Study

Question 14 Marks

You are required to answer the following questions from the above information . From is the information of ''GAGAN LTD''.

Particulars	2019	2020
Working capital Turnover ratio	4 times	6 times
Trade payables	30,000	50,000
Bank overdraft	40,000	25,000
Outstanding Expenses	10,000	25,000
Revenue From operations	16.00.000	18.00,000
Gross Profit %	25% on cost	20% on sales
Credit Purchases	1,00,000	1,20,000
Cash Purchases	45,000	55,000

1. Calculate amount of working Capital of the 2019?
(A)Rs.4,00,000
(B)Rs.3,00,000
(C)Rs.2,45,000
(D)Rs.1,00,000
2. Calculate Current Ratio of the 2020?
(A)$2.67:1$
(B)$4:1$
(C)$1:1$
(D)$2:1$
3. Calculate Trade payable turnover ratio of 2020?
(A)2.5 times
(B)2.75 times
(C)3 times
(D)2.4 times
4. Calculate Cost of Revenue from operations for the year 2019 and 2020?
(A)2019 Rs.12,00,000 and 2020 Rs.14,40,000
(B)2019 Rs.12,40,000 and 2020 Rs.14,40,000
(C)2019 Rs.12,80,000 and 2020 Rs.14,40,000
(D)2019 Rs.14,40,000 and 2020 Rs.12,80,000

Answer

1 - Rs.4,00,000
2 - $2:1$
3 - 3 times
4 - 2019 Rs.12,80,000 and 2020 Rs.14,40,000

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Question 24 Marks

Read the following hypothetical extract of Rehan Limited and answer the given questions on the basis of the

YEAR	2020	2019	2018
AMOUNT	(IN Rs.)	(IN Rs.)	(IN Rs.)
Outstanding Expenses	50,000	40,000	25,000
Prepaid Expenses	3,00,000	2,50,000	3,50,000
Trade Payables	18,00,000	16,00,000	14,00,000
Inventory	12,00,000	10,00,000	11,00,000
Trade Receivables	11,00,000	8,00,000	10,00,000
Cash in hand	17,00,000	12,00,000	15,00,000
Revenue from operations	24,00,000	18,00,000	20,00,000
Gross Profit Ratio	12%	15%	18%

1. Current Ratio for the year 2020 will be _________
(A)$2:1$
(B)$1.8:1$
(C)$2.32:1$
(D)$2.4:1$
2. Quick Ratio for the year 2018 will be _________
(A)$1.75:1$
(B)$1.8:1$
(C)$0.94:1$
(D)$1.25:1$
3. Inventory turnover ratio for the year 2020 will be ____
(A)1.62 times
(B)1.82 times
(C)1.55 times
(D)1.92 times
4. Cost of Revenue from Operations for the year 2020 would be ____
(A)Rs.21,12,000
(B)Rs.21,13,000
(C)Rs.21,15,000
(D)Rs.21,17,000

Answer

1 - $2.32:1$
2 - $1.75:1$
3 - 1.92 times
4 - Rs.21,12,000

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Question 34 Marks

1. Following information is provided by Gagan Ltd. on 31st March 2021

	Particulars	Note No.	2021
I.	Equity and Liabilities
1	Shareholders' Funds
	(a) Share Capital		25,00,000
	(b) Reserves and Surplus	1	10,00,000
2	Non-current Liabilities
	Long term Borrowings	2	17,50,000
3	Current Liabilities
	(a) Short-term Borrowings	3	7,50,000
	(b) Other Current Liabilities	4	3,50,000
	Total		63,50,000
II.	ASSETS
1	Non-current Assets
	Property, Plant & Equipment (Fixed Assets):
	(i) Tangible Assets		4,15,000
	(ii) Intangible Assets		1,00,000
	Non-Current Investment	5	5,00,000
2	Current Assets:
	(a) Current Investment		2,50,000
	(b) Inventories	6	5,35,000
	(c) Cash and Cash Equivalents		4,50,000
	Total		63,50,000

Notes to Accounts

Particulars	2021
Reserves and Surplus Surplus i.e. Balance in Statement of P/L	10,00,000
Long-term Borrowings 12% Debentures	17,50,000
Short-term Borrowings Cash Credit	7,50,000
Other Current Liabilities 12% Debentures: Current Maturities of Long-term Debts	3,50,000
Non-current Investment Trade Investment	5,00,000
Inventories Stock Loose Tools Storesand spares	4,00,000 35,000 1,00,000

(A)$1:1$
(B)$2.25:1$
(C)$2:5:1$
(D)$2:1$
2. Debt to Equity Ratio of the Company will be:
(A)$2:1$
(B)$1:1$
(C)$0.5:1$
(D)$0.75:1$
3. Total Assets to Debt Ratio will be:
(A)$0.28:1$
(B)$2.5:1$
(C)$2.25:1$
(D)$3.6:1$
4. Proprietary Ratio of the Company will be:
(A)$1:1$
(B)$0.55:1$
(C)$0.75:1$
(D)$1.5:1$
5. Capital Employed of the Company will be:
(A)52,00,000
(B)52,50,000
(C)53,00,000
(D)53,50,000
6. If the interest coverage ratio of the company is 6 Times, find Net Profit before Interest and Tax:
(A)10,50,000
(B)12,60,000
(C)12,00,000
(D)15,12,000

Answer

1 - $1:1$
2 - $0.5:1$
3 - $3.6:1$
4 - $0.55:1$
5 - 52,50,000
6 - 12,60,000

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Question 44 Marks

Answer the following question from the above information
1.

RVP Ltd. has provided the following information on 31st March 2021:

Net profit before tax: 6,00,000

Salary: 50,000

Loss by fire: 15,000

Printing & Stationery: 10,000

Interest on debenture 40,000

Depreciation: 20,000

Gain on sale of fixed asset: 15,000

Tax rate 20%

Revenue from operation: 20,00,000

Gross Profit ratio will be

(A)0.64
(B)0.2
(C)0.36
(D)0.4
2. Operating Profit ratio will be
(A)0.65
(B)0.68
(C)0.32
(D)0.35
3. Operating ratio will be
(A)0.65
(B)0.35
(C)0.23
(D)0.68
4. Net profit ratio will be
(A)0.2
(B)0.25
(C)0.3
(D)0.24

Answer

1- 36%
2- 32%
3- 68%
4- 24%

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Question 54 Marks

Answer the following question from the above information
1.

Ridhi Ltd. has provided the following information:

Credit Revenue from operation: 3,00,000.

Cash Revenue from operation: 25% of total revenue from operation

Total purchases during the year: 2,40,000

Cash purchase: 20% of Credit purchase

Excess of closing inventory over opening inventory: 10,000

Carriage Inward: 20,000

Trade receivable turnover ratio: 15 times

Opening debtor was 1/3rd of closing debtor

Average trade payable: 50,000

Cash Revenue of the company will be

(A)3,00,000
(B)4,00,000
(C)2,00,000
(D)1,00,000
2. Credit Purchase of the company will be
(A)40,000
(B)2,00,000
(C)1,60,000
(D)2,40,000
3. Cost of revenue from operation of the company will be
(A)2,00,000
(B)2,50,000
(C)2,40,000
(D)1,60,000
4. Closing trade receivable will be
(A)90000
(B)10000
(C)30000
(D)45000
5. Trade Payable turnover ratio will be
(A)4 Times
(B)3 Times
(C)5 Times
(D)2 Times

Answer

1- 1,00,000
2- 2,00,000
3- 2,50,000
4- 30,000
5- 4 Times

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Question 64 Marks

Answer the following question from the above information
1.

A business has a:

Total revenue from operation: 6,00,000

Cash revenue from operation: 20% of credit revenue from operation

Excess of opening inventory over closing inventory: 10,000

Purchases during the year 4,00,000

Wages: 40,000

Inventory turnover ratio: 9 times

Credit Revenue of the company will be

(A)4,00,000
(B)6,00,000
(C)1,00,000
(D)5,00,000
2. Cost of Revenue from operation the company will be:
(A)4,50,000
(B)4,40,000
(C)4,30,000
(D)4,60,000
3. Closing inventory of the company will be
(A)45000
(B)55000
(C)50000
(D)40000
4. Gross profit ratio of the company will be:
(A)0.2
(B)0.15
(C)0.25
(D)0.3

Answer

1- 5,00,000
2- 4,50,000
3- 45,000
4- 25%

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Question 74 Marks

Answer the following question from the above information
1.

After preparing the financial statements for the year 31st March 2021. XYZ Ltd. has provided the following information:

Working Capital Rs.45,000;

Total Debt Rs.1,00,000 and

Long-term Debt Rs. 70,000

Non-current asset 4,25,000

Current asset of the company will be:

(A)90000
(B)85000
(C)70000
(D)75000
2. Capital employed of the company will be:
(A)4,70,000
(B)4,30,000
(C)5,00,000
(D)1,00,000
3. Proprietary ratio of the company will be:
(A)$0.9:1$
(B)$0.8:1$
(C)$0.86:1$
(D)$0.94:1$
4. Current ratio of the company will be:
(A)$3:1$
(B)$2.5:1$
(C)$2.83:1$
(D)$2:1$

Answer

1- 75,000
2- 4,70,000
3- $0.8:1$
4- $2.5:1$

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Question 84 Marks

Answer the following question from the above information
1.

Rishi Ltd. has provided following information at the end of the accounting year:

Current ratio 3:1

Quick ratio 1.2:1

Working capital: 1,80,000

Non-current asset: 5,30,000

Shareholders fund: 4,00,000

Current asset of the company will be:

(A)90000
(B)1,80,000
(C)3,60,000
(D)2,70,000
2. Quick Asset of the company will be:
(A)1,72,000
(B)1,62,000
(C)1,08,000
(D)98000
3. Inventory of the company will be:
(A)1,08,000
(B)1,20,000
(C)1,52,000
(D)1,62,000
4. Capital employed of the company will be:
(A)7,10,000
(B)8,00,000
(C)4,90,000
(D)6,50,000
5. Debt equity Ratio of the company will be:
(A)$0.675:1$
(B)$0.8:1$
(C)$0.7:1$
(D)$0.775:1$

Answer

1- 2,70,000
2- 1,08,000
3- 1,62,000
4- 7,10,000
5- $0.775:1$

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Question 94 Marks

Answer the following question from the above information
1. You are required answer the following questions 5 to 8: Vinod Ltd. has provided the following information on 31st March 2021: Total Assets Rs.8,00,000: Debentures Rs.2,00,000 (Redeemable after 4 years); Long-term Bank Loan Rs. 1,50,000 Long-term Provisions Rs.50,000; Debentures Rs.1,40,000 (Redeemable with in next 6 months); Trade Payables 60,000. Debt to Equity Ratio of the company will be:
(A)$2:5:1$
(B)$2:7:1$
(C)$2:1$
(D)$4:1$
2. Issue of Fresh Debentures of Rs.1,00,000. Now Debt to Equity Ratio will be:
(A)$2:1$
(B)$2:5:1$
(C)$3:1$
(D)$1:1$
3. Issue of fresh Equity Shares of Rs.50,000. Now Debt to Equity Ratio will be:
(A)$2:5:1$
(B)$1:5:1$
(C)$2:1$
(D)$1:6:1$
4. Old and damaged Furniture costing 1,30,000 was sold just for Rs.30,000. Now Debt to Equity Ratio will be:
(A)$4:1$
(B)$3:1$
(C)$2:1$
(D)$1:1$

Answer

1- $2:1$
2- $2:5:1$
3- $1:6:1$
4- $4:1$

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Question 104 Marks

Answer the following question from the above information
1. You are required to answer the following question 1 to 4: Vinod Ltd. has provided the following information: Total Assets Rs. 18,00,000; Tangible Fixed Assets Rs. 11,00,000; Non-current Investment 3,00,000; Shareholders Funds Rs. 11,00,000; Non-Current Liabilities Rs.5,00,000. Current Ratio of the company will be:
(A)$1:1$
(B)$2:1$
(C)$2:5:1$
(D)$1:2$
2. If company pays Rs.40,000 to the creditors through online transfer. Now Current Ratio will be:
(A)$2:1$
(B)$2:5:1$
(C)$2:25:1$
(D)$1:1$
3. Goods purchased for Cash Rs.1,20,000. Now Current Ratio will be:
(A)$2:1$
(B)$2:5:1$
(C)$2:25:1$
(D)$1:1$
4. Sale of an old machinery at cost in cash for Rs.1,00,000. Now Current Ratio will be:
(A)$2:25:1$
(B)$2:1$
(C)$1:5:1$
(D)$2:5:1$

Answer

1- $2:1$
2- $2:25:1$
3- $2:1$
4- $2:5:1$

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