a) Return on Capital employed.

b) Current Ratio
c) Debt Equity Ratio
d) Fixed asset Turn over Ratio
e) Inventory Turn over Ratio.
f) Earning per share.

Particulars 2015 2016 2017

Liability
Share capital shares of Rs 800 1000 1000
10/ each.
Reserve and surplus. 700 800 1000
Secured Term Loans 800 2000 2400
Cash Credits from Banks 800 1000 1500
Sundry Creditors. 1200 900 1100
4300 5700 7000

Particulars 2015 2016 2017

Assets
Fixed Assets : Gross Block 2800 3000 4000
Less : Depreciation 920 1400 2000
1880 1600 2000

Stock 1520 2400 2800

Debtors 480 500 900
Other Current assets 420 1200 1300
4300 5700 7000

Extracts of Profit and Loss Account.

Particulars For year For the

ended year
31.03.20 ended
16 31.03.20
17
Sales 4800 7200
 Profit before depreciation and Interest on 1500 2400
Term Loan
Depreciation 480 600
Interest on Term Loan 420 600
Tax 300 600
Dividends 100 150

Answers to the questions.

1) Return on capital employed.

31.03.2016

Profit before Interest and Tax /Equity Capital + Reserve+ Term Loan

Profit before Interest and Tax = 1500 less Depreciation Rs 480= 1020.

For arriving at the capital employed we have to find out the average
value of Capital +Free Reserve + Term Loan for the two years 1989 and
19990

Average capital = Rs1000+800= 1800/2= 900

Average Free Reserve = Rs 800+700=1500/2= 750

Term Loan = Rs 2000+800= 2800/2=1900

Total capital employed = 3550

Profit after depreciation but before Interest and Tax for the year 1990 is
Rs1500- Rs480 = Rs1020

Return on capital employed = Profit / Capital employed

Return on Capital employed. = 1020/3550= 28.74%

31.03.2017

Average capital Rs1000

Average Reserve 800+1000=1800/2= 900/

Average Term Loan = Rs2000+2400= 4400/2= 2200

Total average capital = 4100/

Return on Capital employed = 1800/4100= 43.90

Question ---2

Current Ratio.

Current Ratio = Current Asset / Current Liability.

Current asset = Stock + Debtors + Other Current asset

Current Liability = Cash Credit from Bank + Sundry Creditors

31.03.2016

Current asset = Stock + Debtors + Other Current asset

Current Asset = Rs2400+ Rs 500+ Rs1200 = Rs4100

Current Liability = Cash Credit from Bank + Sundry Creditors

Current Liability = Rs1000+ Rs900= Rs1900

Current Ratio = 4100/1900= 2.1578 =2.16

31.03.2017

Current asset = Stock + Debtors + Other Current asset

Current Asset = Rs2800+ Rs 900+ Rs1300 = Rs5000

Current Liability = Cash Credit from Bank + Sundry Creditors

Current Liability = Rs1500+ Rs1100= Rs2600

Current Ratio =5000/2600= 1.9230=1.92

Question No 3

Debt Equity Ratio.

Generally Debt Equity Ratio= Long term Debt/Tangible Net Worth

= Outside Long term Debt /( Capital + Reserve – Intangible Asset)

31.03.2016

Outside Long Term Debt = 2000

Tangible Net Worth = Rs1000+ Rs800 = Rs1800

Debt Equity Ratio = 2000/1800= 1.11

31.03.2017

Outside Long Term Debt = 2400

Tangible Net Worth = Rs1000+ Rs1000 = Rs2000

Debt Equity Ratio = 2400/2000= 1.2

Question No 4

Fixed Asset Turn Over Ratio.

31.03.2016

Sales / Average Fixed asset

Sales for the year 1990 = Rs4800

Average Fixed Asset = Rs1880+ Rs1600 /2

Average Fixed Asset = Rs3480 /2 = 1740

Fixed Asset Turn Over Ratio= 4800/ 1740= 2.758 = 2.76

Fixed Asset Turn Over Ratio.

31.03.2017

Sales / Average Fixed asset

Sales for the year 1991 = Rs7200

Average Fixed Asset =Rs1600+ Rs2000 /2

Average Fixed Asset = Rs 3600 /2 = 1800

Fixed Asset Turn Over Ratio= 7200/ 1800= 4.00

Question Number -5

Inventory Turn Over Ratio.

31.03.2016

Inventory Turn Over Ratio = Cost of sales / Average Inventory

For the year 1990

Average Inventory = Rs1520+Rs2400/2 =RsRs3920/2= Rs1960

Sales during 1990= Rs4800

Cost of sales in 1990 = Sales ---- Profit before Interest, Depreciation Taxes
etc.

Cost of sales = Rs4800--- Rs1500= Rs3300

Inventory Turn Over Ratio = Rs3300/ Rs1960= 1.6836 = 1.68

Inventory Turn Over Ratio.

31.03.2017

Inventory Turn Over Ratio = Cost of sales / Average Inventory

For the year 1991 Average Inventory = RsRs2400 + 2800/2 =Rs5200/2=

Rs2600

Sales during 1991= Rs7200

Cost of sales in 1991 = Sales less Profit before Interest , Depreciation tax etc

Cost of sales = Rs7200 --- Rs2400= Rs4800

Inventory Turn Over Ratio = Rs4800/ Rs2600= 1.8461=1.85

Question Number 6

Earning per share

Earning per share = Profit available for equity shareholders /

Number of shares

31.03.2016
Profit available for equity share holders = Profit before Depreciation etc ----
Depreciation + Interest on Term Loan + Taxes

For the year 1990 Profit available for distribution to share holders =

= Rs1500 --- (Rs480 + Rs420+ Rs300)

= Rs1500 ---- Rs1200= Rs300

Number of Equity share holders as on 31.12.1990 = Rs1000/Rs10 = 100

Earing per share = 300/100 = 3

Earning per share = Profit available for equity shareholders /

Number of shares

31.03.2017

Profit available for equity share holders = Profit before Depreciation etc ----
Depreciation + Interest on Term Loan + Taxes

For the year 1991 Profit available for distribution to share holders =

= Rs2400 --- (Rs600 + Rs600+ Rs600)

= Rs2400 ---- Rs1800= Rs600

Number of Equity share holders as on 31.12.1991 = Rs1000/Rs10 = 100

Earning per share = 600/100 = 6