Which of the following formulae is INCORRECT?
Average collection period = 365/Creditors turnover ratio
The correct answer is Operating expenses = Cost of goods sold + selling expenses + Administrative expenses. This formula is incorrect as operating expenses do not simply add up cost of goods sold and selling expenses; they involve other items as well.
Which of the following ratio is also termed as leverage ratio?
Interest Coverage Ratio and proprietary ratio comes under:
Which ratios are calculated for measuring the efficiency of operation of business based on effective utilisation of resources?
Net profit after taxes of a firm is Rs.1,00,000 and its fixed interest charges on long term debt are Rs. 20,000. What is the interest coverage ratio if the rate of income tax is 60%?
Match the items in Column – I with the items in Column – II and indicate the correct code :
| Column – I | Column – II |
| a. Debt-Equity Ratio | i. Net Profit before interest and tax $\div Interest on long term loans$ |
| b. Proprietary Ratio | ii. Equity share capital + Reserves $\div Preference share capital + Interest bearing finance$ |
| c. Interest coverage ratio | iii. Long term debts $\div Shareholder's Funds $ |
| d. Capital gearing ratio | iv. Shareholder's Funds $\div Total Assets $ |
Codes:
A company sold 20% of the goods on cash basis and balance on credit basis. Debtors are allowed \(1\frac{1}{2}\) months’ credit and their balances as on 31st March, 2023 is Rs. 1,25,000. Assume that the sale is uniform throughout the year. Credit sales would be
The amount of closing stock would be, when
Sales - Rs. 6,00,000
Opening Stock - Rs. 50,000
Purchases - Rs. 5,00,000
Productive Wages - Rs. 10,000
Carriage Inwards - Rs. 7,000
Rate of Gross Profit on cost - 20%