[DK Goel] Q. 45,46,47,48 Accounting Ratios Solutions Class 12 CBSE (2026-27)
the solutions of Question number 45, 46, 47, 48 of Accounting Ratios chapter 5 of DK Goel Class 12 CBSE (2026-27)
Q. 45. The proprietary ratio of M Ltd. is 0.80 : 1.
state with reasons whether the following transactions will increase, decrease or not change the proprietary ratio:
(i) Obtained a loan from bank ₹ 2,00,000 payable after five years.
(ii) Purchased machinery for cash ₹ 75,000.
(iii) Redeemed 5% redeemable preference shares ₹ 1,00,000.
(iv) Issued equity shares to the Vendors of machinery purchased for ₹ 4,00,000.
[Ans. (i) Decrease, (ii) No Change; (iii) Decrease; (iv) increase.]
Solution:-
Q. 46. From the following information, calculate interest coverage ratio and give your comments also:
| ₹ | |
| Net Profit after Interest and Tax | 1,20,000 |
| Rate of Income Tax | 50% |
| 15% Debentures | 1,00,000 |
| 12% Mortgage Loan | 1,00,000 |
[Ans. Interest Coverage Ratio = 9.89 times.]
Solution:-
Comments:– An interest coverage ratio of 6 to 7 times is considered appropriate. As the actual interest coverage ratio of this company is nearly 10 times, it means that the company will be able to pay the interest on long-term loans regularly.
Q. 47. The following particulars are given to you:
| ₹ | |
| Share Capital | 1,00,000 |
| Reserve and Surplus | 1,50,000 |
| Current Liabilities | 4,00,000 |
| Current Assets | 5.50,000 |
| Property, Plant and Equipment | 7,00,000 |
| Loans @ 10% | 4,00,000 |
| 12% Debentures | 2,00,000 |
Net Profit for the year after interest and tax was ₹ 96,000. Rate of Income Tax was 50%.
Calculate (i) Debt Equity Ratio; (ii) Proprietary Ratio; and (iii) Interest Coverage Ratio.
Also give your Comments.
[Ans. (i) Debt-Equity Ratio 2.4 : 1; (ii) Proprietary Ratio 20%; (iii) Interest coverage Ratio = 4 times.
Solution:-
Comments:
(i) Debt-Equity Ratio of the company is not satisfactory because it is more than the acceptable norms of 2 : 1. It shows risky financial positions from the long-term point of view.
(ii) Proprietary Ratio is only 20% which means that the long-term financial position of the Company is not satisfactory because only 20% of the total assets of the company are funded by equity.
(iii) Normally acceptable interest-coverage ratio is 6 or 7 times, whereas the actual ratio for this company is 4. It means that the company may face difficulty in paying the interest on long-term loans regularly in case of fall of profits.
Q. 48. Calculate Interest Coverage Ratio and Rate of Interest on Bank Loan from the following information :
| (i) Bank Loan (Assume the only debt of the company) | ₹50,00,000 |
| (ii) Profit after Tax | ₹ 8,57,500 |
| (iii) Tax Rate | 30% |
| (iv) Profit before Interest and Tax | ₹15,75,000 |
[Ans. Interest Coverage Ratio : 4.5 Times; Rate of Interest 7%]
Solution:-
