181 :- On the basis of the following information, calculate:
(a) Debt to Equity Ratio; and
(b) Working Capital Turnover Ratio
Solution :-
(a) Debt = 6% Debentures + 9% Loan from Bank
= 3,00,000 + 7,00,000
= Rs 10,00,000
Equity = Paid up Share Capital + Debenture Redemption Reserve
= 17,00,000 + 3,00,000
= Rs 20,00,000
Debt to Equity Ratio = Debt/Equity
= 10,00,000/20,00,000
= 0.5 : 1
(b) Revenue from Operation = Cash Sales + Credit Sales
= 40,00,000 + 20,00,000
= Rs 60,00,000
Current Assets = Other Current Assets + Closing Inventory
= 8,00,000 + 1,00,000
= Rs 9,00,000
Working Capital = Current Assets – Current Liabilities
= 9,00,000 – 4,00,000
= Rs 5,00,000
Working Capital Turnover Ratio = Revenue from Operation/Working Capital
= 60,00,000/5,00,000
= 12 Times