ACCOUNTING FOR MANAGEMENT

ASSIGNMENT – 2
BATCH – 17-19

Q.1. Premier Company's net profit margin is 8 percent, total assets turnover ratio is
2.5 times, debt to total assets ratio is 0.6. What is the return on equity for Premier?

Q.2. The following information is given for Alpha Corporation:

Sales 3500
Current ratio 1.5
Acid test ratio 1.2
Current liabilities 1000
What is the inventory turnover ratio?

Q. 3. The following information is given for Beta Corporation:

Sales 5000
Current ratio 1.4
Inventory turnover ratio 5
Acid test ratio 1.0
What is the level of current liabilities?

Q. 4. Safari Inc. has profit before tax of Rs.90 million. If the company's times
interest covered ratio is 4, what is the total interest charge?

Q. 5. A has profit before tax of Rs.40 million. If its times interest covered ratio is
6, what is the total interest charge?

Q. 6. McGill Inc. has profit before tax of Rs.63 million. If the company's times
interest covered ratio is 8, what is the total interest charge?

Q. 7. The following data applies to a firm :

Interest charges Rs.200,000
Sales Rs.6,000,000
Tax rate 40 percent
Net profit margin 5 percent
What is the firm's times interest covered ratio?
Q. 8. The following data applies to a firm:
Interest charges Rs.50,000
Sales Rs.300,000
Tax rate 25 percent
Net profit margin 3 percent
What is the firm's times interest covered ratio?

Q. 9. The following data applies to a firm :

Interest charges Rs.10,000,000
Sales Rs.80,000,000
Tax rate 50 percent
Net profit margin 10 percent
What is the firm's times interest covered ratio? 12

Q. 10. A firm's current assets and current liabilities are 25,000 and 18,000
respectively. How much additional funds can it borrow from banks for short term,
without reducing the current ratio below 1.35?

Q. 11. LNG’s current assets and current liabilities are 200,000 and 140,000
respectively. How much additional funds can it borrow from banks for short term,
without reducing the current ratio below 1.33?

Q. 12. Navneet’s current assets and current liabilities are 10,000,000 and 7,000,000
respectively. How much additional funds can it borrow from banks for short term,
without reducing the current ratio below 1.4?

Q.13. A firm has total annual sales (all credit) of 25,000,000 and accounts
receivable of 8,000,000. How rapidly (in how many days) must accounts
receivable be collected if management wants to reduce the accounts receivable to
6,000,000?

Q. 14. A firm has total annual sales (all credit) of 1,200,000 and accounts
receivable of 500,000. How rapidly (in how many days) must accounts receivable
be collected if management wants to reduce the accounts receivable to 300,000?

Q. 15. A firm has total annual sales (all credit) of 100,000,000 and accounts
receivable of 20,000,000. How rapidly (in how many days) must accounts
receivable be collected if management wants to reduce the accounts receivable to
15,000,000?
Q. 16. The financial ratios of a firm are as follows.
Current ratio = 1.25
Acid-test ratio = 1.10
Current liabilities = 2000
Inventory turnover ratio = 10
What is the sales of the firm?

Q. 17. The financial ratios of a firm are as follows.

Current ratio = 1.33
Acid-test ratio = 0.80
Current liabilities = 40,000
Inventory turnover ratio = 6
What is the sales of the firm?

Q. 18. The financial ratios of a firm are as follows.

Current ratio = 1.6
Acid-test ratio = 1.2
Current liabilities = 2,000,000
Inventory turnover ratio = 5
What is the sales of the firm?

Q. 19. Complete the balance sheet and sales data (fill in the blanks) using the
following financial data:
Debt/equity ratio = 0.80
Acid-test ratio = 1.1
Total assets turnover ratio = 2
Days' sales outstanding in
Accounts receivable = 30 days
Gross profit margin = 30 percent
Inventory turnover ratio = 6
Balance sheet
Equity capital 80,000 Plant and equipment . . . .
Retained earnings 50,000 Inventories . . . .
Short-term bank borrowings . . . . Accounts receivable . . . .
Cash . . . .
Sales . . . .
Cost of goods sold ……..
Q. 20. Complete the balance sheet and sales data (fill in the blanks) using the
following financial data:
Debt/equity ratio = 0.40
Acid-test ratio = 0.9
Total assets turnover ratio = 2.5
Days' sales outstanding in
Accounts receivable = 25 days
Gross profit margin = 25 percent
Inventory turnover ratio = 8
Balance sheet
Equity capital 160,000,000 Plant and equipment--------
Retained earnings 30,000,000 Inventories ………
Short-term bank borrowings . . . … Accounts receivable ….. . . .
Cash . . . .
Sales ....….
Cost of goods sold …….

Q. 21. Complete the balance sheet and sales data (fill in the blanks) using the
following financial data:
Debt/equity ratio = 1.5
Acid-test ratio = 0.3
Total assets turnover ratio = 1.9
Days' sales outstanding in
Accounts receivable = 25 days
Gross profit margin = 28 percent
Inventory turnover ratio = 7
Balance sheet
Equity capital 600,000 Plant and equipment . . . .
Retained earnings 100,000 Inventories . . . .
Short-term bank borrowings . . . Accounts receivable . . . .
Cash . . . .
Sales . . . …..
Cost of goods sold ………