A/c                                   30,000                         Stock                                                   30000, Secured loan                           80,000                         Sundry Debtors                                   30000, Sundry creditors                     50,000                         Advances                                            10000, Provision for taxation                         20,000                         Cash Balance                                      10000, 3,00,000                                                                                  300000, Debt – Equity = Long – Term Debt / Shareholders Fund, Shareholder’s Fund= Equity Share Capital + Reserves + P.L.A/c, = 1,00,000 + 20,000 + 30,000       = 1,50,000, Debt-Equity Ratio = 80,000 / 1,50,000=.53, Liquidity Ratio = Liquid Assets / Liquid Liabilities, Liquid Assets = Sundry Debtors + Advances + Cash Balance, Liquid Liabilities = Provision for Taxation + sundry creditors, = Fixed Assets / Current Assets= 1,40,000/ 100000, Fixed Assets Turnover =Turnover / Fixed Assets= 5,60,000/1,40,000. Before uploading and sharing your knowledge on this site, please read the following pages: 1. Bills Receivable from the buyer of fixed assets, should be excluded. QUESTION 2: Accounting analysis (18 marks) 2.1 Provide adjusting journal entries (with amounts) to correct for American Tissue’s improper capitalization of operating expenses in its fiscal year ending September 30, 2000. The state of low return is not desirable. Home → Problems and Solutions – Ratio Analysis . The firm can increase the rate of return on investment by increasing production. Cost of sale 19,20,000 Fixed Assets 14, 40,000. Financial Ratio Analysis Assignment On K.Pastry. Financial Performance Analysis (MBA project) January 2019; DOI: 10.13140/RG.2.2.33643.39203. The performance of Debt Collection Department is poor. BBA quiz multiple choice questions test for BBA MCQ exams, educational questions with answer BBA MCQ GK explaination. address all of these questions through financial analysis. Cash coverage ratio. The following is the Balance Sheet of a company as on 31st March: From the following particulars found in the Trading, Profit and Loss Account of A Company Ltd., work out the operation ratio of the business concern: The following is the summarised Profit and Loss Account of Taj Products Ltd. for the year ended 31st December: From the following Balance Sheet and additional information, you are required to calculate: A company has capital of Rs. answers to these and other questions. A low ratio may be result of inferior quality goods, stock of un-saleable and absolute goods. for the year                                             8068, To Opening stock                                1378                By Sales                      33984, To Purchase (BD                                 25972              Sales Return                380, To gross profit                                     8068                                                    33604, 35418                                                  35418, Cost of Goods Sold = Cost of Goods Sold / Average Stock, Average Stock = (Opening Stock + Closing Stock)/ 2, (iii) Percentage of Gross Profit to Turnover = Gross Profit / Sales *100. Students should solve the CBSE issued sample papers to understand the pattern of the question paper which will come in class 12 board exams this year. This video helps you to learn Calculation of Financial Ratios with the help of practical example Financial modelling is a quantitative analysis commonly used for either asset pricing or general corporate finance. A: Multiple Choice Questions. 375, ©                                 Solvency Ratio = Outside Liabilities / Total Assets, Outside Liabilities = Debenture + Overdraft + Creditors, = 3,00,000 + 1,00,000 + 2,00,000 = 6,00,000, Solvency Ratio =( 600000 / 2200000) * 100, (d)                                Stock of Working Capital Ratio = Stock / Working Capital, Stock of Working Capital Ratio =* 100 = 100%. However, the Liquid Ratio is 0.65: 1. Problem 6. At the same time, a higher ratio reflects efficient business activities. Uses of Arithmetic Mean (i) A. M. is extensively used in practical statistics. Problem 3. Terms of Service 7. MBA Sales™ Degree Sample Test Questions Question 1 Selling involves: Choice-1: pushing the product in the market without any consideration for your customer's needs and wants Choice-2: trying to make your customer want what the company has to offer Choice-3: focus is on your product Choice-4: focus is on your customer Choice-5: Options 1, 2 and 3 Illustration No. Which of the following is considered a profitability measure? Debt – Equity Ratio =  Debt – Equity Ratio / Long – Term Debt, Shareholder’s Fund = Equity + Preference + Retained Earnings, Fixed Assets Ratio= Fixed Assets / Proprietor’s Fund= -1,80,000, Proprietor’s Fund=Equity Share Capital + Preference Share Capital+ Retained Earnings, Fixed Assets Ratio = 1,80,000 / 1,70,000= 1.05, Current Ratio = Current Assets / Current Liabilities, Current Assets = Stores + Debtors + BR + Bank= 25,000 + 55,000 + 3,000 + 2,000 = 85,000, Liquid Liabilities = Debtors + Bill Receivable + Cash=55,000 + 3,000 + 2,000 = 60,000. How effectively is the organization using its resources? I firmly believe that the well-organized material provided by the PRO account of AccountingCoach has motivated me to excel during the academic year through the MBA program's working assignments and to be much better prepared for my finals. (v) Financiers of Long-term Funds : They are concerned with the firm’s long-term solvency and survival; since they provide long-term funds to firm. online gk on Commarce Quiz MBA and BBA Quiz, Accounting Terms. The Supply Co. has total equity of $639,400 and net income of The average collection period of 1.5 months implies that debtors are collected in 45 days. With our lesson, Financial Statement Analysis: Definition, Purpose, Elements & Examples, you'll be able to answer that question. But the Net Profit Ratio is only 5%. Calculate stock turnover ratio from the following information : Opening stock 5                                  8,000, Purchases                                            4,84,000, Sales                                                    6,40,000, Stock Turnover Ratio = Cost of Goods Sold / Average Stock. It is not desired. Authors: Wesen Legessa Tekatel. Problem 4. 1 CHAPTER-I INTRODUCTION 2. Ratio Analysis 223 EBIT ROCE ROE Impact of EBIT on ROCE and ROE in a Highly Geared Firm The concept of ‘Trading on Equity’ can be explained with the following example. Practice the concepts of Ratio and Proportion at MBA section of jagranjosh.com and prepare well … To help identify the short term liquidity of a firm, this ratio is used. So there is no need to calculate the average stock. Prohibited Content 3. The position is satisfactory. DEFINITION: “The indicate quotient of two mathematical expressions and as “The … Here is a compilation of top thirteen accounting problems on ratio analysis with its relevant solutions. A turnover ratio of 8 signifies that debtors get converted into cash 8 times in a year. However, the fixed assets to proprietorship ratio reveals that the entire fixed assets were not purchased by the proprietors’ equity. 4.07; Jimma University; Download file PDF Read file. Account Disable 11. From the data calculate : (i) Gross Profit Ratio (ii) Net Profit Ratio (iii) Return on Total Assets (iv) Inventory Turnover (v) Working Capital Turnover (vi) Net worth to Debt Sales 25,20,000 Other Current Assets 7,60,000. 4 Calculate the capital gearing from the following information: Rs. This chapter focuses on the interpretation and analysis of fi nancial statements. They analyze the firm’s profitability over time, its ability to generate cash to be able to pay interest and repay the principal amount. It means the firm depends on outside liabilities. Financial ratio analysis is one of the best tools of performance evaluation of any company. Ratio analysis is effective only where same accounting principles and policies are adopted by other concerns too, otherwise inter-company comparison will not exhibit a real picture at all. What Are Accounting Ratios? A high ratio implies good inventory ‘management and an indication of under-investment. Here Get quiz on the Learn Commarce Quiz Quiz of questions that can be used for self-study, homework. 1. Quick ratio helps us find the solvency for six months and the reason why inventory is subtracted is that inventory usually take more than six month to convert into liquid asset. Disclaimer 8. Price-earnings ratio. MBA Quiz Quiz Revision Quizes, MBA Quiz articles. Several ratios calculated from the accounting data can be grouped into various classes according to financial activity or function to be evaluated. 2 times c. 6 times d. 8 times. Ratio analysis project 1. The three common liquidity ratios used are current ratio, quick ratio, and burn rate. Copyright 9. Ratio Analysis allows us to answer questions such as: How profitable is the company? The average collection period ratio measures the quality of debtors since it indicates the rapidity or slowness of their collectability. Ideal for students preparing for semester exams, MBA, CA, BBA, BMS, PSUs, NET/SET/JRF, UPSC and other entrance exams. Days sales in inventory. Calculate the operating Ratio from the following figures. Cost of Goods sold = Op. PROBLEMS AND SOLUTIONS Type 1: Final Account to Ratio Problem 1. We use Microsoft Corporation's 2004 financial statements for illustration purposes throughout this reading. Home >> Category >> Finance (MCQ) Questions and answers >> Ratio Analysis; 1) Determine Debtors turnover ratio if, closing debtors is Rs 40,000, Cash sales is 25% of credit sales and excess of closing debtors over opening debtors is Rs 20,000. a. Investors and creditors use accounting information to evaluate the fi rm. Candidates must be prepared to apply … Through ratio analysis, special events cannot be identified. Debt-Equity Ratio is 0.34: 1. It is an indication of excessive inventory and over investment in inventory. On the other hand, low Turnover Ratio and long collection period reflects that payments by debtors are delayed. From the following details of a trader you are required to calculate : (iii) Percentage of Gross profit to turnover, Sales $                         33,984             Stock at the close at cost price                        1814, Sales Returns              380                  G.P. The Balance sheet of Naronath & Co. as on 31.12.2000 shows as follows: Liabilities                                $                      Assets                                                  $, Equity capital                          1,00,000          Fixed Assets                           1,80,000, 15% Preference shares            50,000             Stores                                      25,000, 12% Debentures                      50,000             Debtors                                   55,000, Retained Earnings                   20,000             Bills Receivable                      3,000, Creditors                                 45,000             Bank                                        2,000, 2,65,000                                                          2,65,000. 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