1.

From the following information calculate (i) Debt equity ratio (ii) Working Capital Turnover Ratio.ParticularsRs.Net revenue from operation60,00,000Cost of revenue from operation45,00,000Other current assets11,00,000Current liabilities4,00,000Paid up share capital6,00,0006% debentures3,00,0009% loan1,00,000Debenture Redemption Reserve2,00,000Closing Inventors1,00,000

Answer»

(i) Debt Equity Ratio =  Debit/Equity

Debt = 6% debentures + 9% loan 

= Rs. 3,00,000 + Rs. 1,00,000 

= Rs. 4,00,000 

Equity = Paid up share capital + Debenture 

Redemption Reserve = 6,00,000 + 2,00,000 

= 8,00,000 

Debt Equity Ratio = 4,00,000/8,00,000

= 0.5 = 1

(ii) Working Captial Turnover Ratio = (Net Revenue form operation)/(Working Captial )

Working Capital = Other Current Assets + Closing Inventors – Current Liabilities 

= Rs. 11,00,000 + Rs. 1,00,000 – Rs. 4,00,000 

= 8,00,000. 

Working capital turnover Ratio = 60,00,000/8,00,000 

=7.5 times



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