T S Grewal Solutions 2026-27 [Class 12] – Ratio Analysis– Q 111 to 120

Ratio Analysis /

Solution for Q 111 to 120 of Chapter 4 of Book 3 - Analysis of Financial Statements of T S Grewal Class 12 Accountancy 2026-27 are given below. The Chapter name is Ratio Analysis class 12. These Solutions are based on topics trade payables turnover ratio, calculation of opening and closing trade payables, working capital turnover ratio

Working notes are given with each solution. These help in understanding the steps and are also important for board exams as marks are given for steps.Debt equity ratio is a key ratio is finfing the long term solvency of any business and is critical business health parameter. A higher debt equity ratio is generally considered unhealthy for business as it indicates higher dependency on external funds and future solvency problems may arise.

These solutions are also useful for CA Foundation, CS Foundation and CMA Foundation students. The solutions will be helpful for students as well as teachers teaching class 12 accounts.

Question 111
Step 1              
Credit Purchases = Total Purchases - Purchases Return - Cash Purchases
    2100000 - 100000   - 400000
               
  = 1600000          
               
Step 2              
Average = (Opening + Closing   / 2
Trade Payables Trade Payable Trade Payable)    
    (150000 + 50000) + (450000 + 150000)  
               
  = 400000          
               
Step 3              
Trade Payables = Net Credit Purchases / Average Trade Payables  
Turnover Ratio 1600000 / 400000      
               
  = 4 Times        
               
Step 4              
Average debt = 12 / Trade Payables Turnover Ratio
payment period            
  = 12 /   4    
               
  = 3 Months        
▶ Video Solution: Coming Soon
Question 112
Step 1        
Credit Purchases = Net Purchases - Cash Purchases
    4320000 - 1080000
         
  = 3240000    
         
Step 2        
Trade Payables = Net Credit / Average Trade Payables
Turnover Ratio Purchases  
    3240000 / 540000
         
  = 6 Times  
         
Note : Average debt payment period not asked in question. Given here only for information                
Step 4          
Average debt = 12 / Trade Payables Turnover Ratio
payment period        
  = 12 /   6
           
  = 2 Months    
           
Note : Since information for opening trade payables is not given so closing trade payables                
            assumed to be average trade payables                
▶ Video Solution: Coming Soon
Question 113
Case 1            
Credit Purchases = Net Purchases - Cash Purchases
    360000   - 90000  
             
  = 270000        
             
Note : Net purchases are already given so purchase returns will not be deducted again
             
Step 2            
Trade Payables = Net Credit / Average Trade
Turnover Ratio Purchases   Payables  
    270000   / 45000  
             
  = 6   Times    
             
Step 3            
Average debt = 12   / Trade Payables Turnover Ratio
payment period          
  = 12   /   6
             
  = 2 Months      
             
Note : Since information for opening trade payables is not given so closing trade payables                  
            assumed to be average trade payables                  
Case 2            
Step 1            
Average = (Opening + Closing / 2
Trade Payables Trade Payable Trade Payable)  
    15000 + 45000 / 2
  = 30000        
             
Step 2            
Trade Payables = Net Purchases / Average Trade Payables
Turnover Ratio 360000 / 30000    
             
  = 12 Times      
             
Note : Average debt payment period not asked in question. Given here only for information                  
Step 3          
Average debt = 12 / Trade Payables Turnover Ratio
payment period        
  = 12 /   12
  = 1 Months    
           
Case 3          
Step 1          
Trade Payables = Net Purchases / Average Trade Payables
Turnover Ratio 360000 / 45000  
           
  = 8 Times    
           
Note : Average debt payment period not asked in question. Given here only for information                  
Step 2            
Average debt = 12   / Trade Payables Turnover Ratio
payment period          
  = 12   /   8
  = 1.5 Months      
             
Note : Since information for opening trade payables is not given so closing trade payables                  
            assumed to be average trade payables                  
Case 4            
Step 1            
Trade Payables = Net Purchases / Average Trade Payables
Turnover Ratio 360000   / 30000  
          (55000-25000)
  = 12 Times      
             
Step 2            
Average debt = 12   / Trade Payables Turnover Ratio
payment period          
  = 12   /   12
             
  = 1 Months      
             
Note : Creditors for machinery will be excluded as it does not arise from                  
the purchase of goods in which the firms deals in                  
▶ Video Solution: Coming Soon
Question 114
Step 1                
Gross Profit = Revenue from X Gross Profit Ratio
      Operations        
      300000   X 25%    
                 
    = 75000          
                 
Step 2                
Cost of Goods Sold = Revenue from - Gross Profit  
      Operations        
      300000   - 75000    
                 
    = 225000          
                 
Step 3                
Cost of Goods Sold = Opening Inventory - Closing Inventory + Purchases
225000   = 75000   - 150000 + Purchases
                 
Purchases = 225000   - 75000 + 150000
    = 300000          
                 
Step 4                
Credit Purchases = Total Purchases - Cash Purchases  
                 
    = 300000   - 25% of total purchases
    = 300000   - 75000    
    = 225000          
                 
Step 5                
Trade Payables = Net Credit Purchases / Average Trade Payables
Turnover Ratio              
3   = 225000   / x    
  x = 225000   / 3    
                 
Average Trade = 75000          
Payables                
                 
Step 6                
Average   = (Opening   + Closing / 2
Trade Payables   Trade Payable   Trade Payable)  
75000   = x   + x + 75000  
                 
2x   = (75000 X 2) - 75000    
                 
    = 150000   - 75000    
                 
x   = 75000   / 2    
                 
Opening Trade = 37500          
Payables                
                 
Closing Trade = 112500 (37500+75000)      
payables                
▶ Video Solution: Coming Soon
Question 115
Step 1        
Working Capital = Current Assets - Current Liabilities
    1250000 - 500000
  = 750000    
         
Step 2        
Working Capital = Revenue from / Working Capital
Turnover Ratio operations  
    3000000 / 750000
  = 4 Times  
▶ Video Solution: Coming Soon
Question 116
Step 1          
Working Capital = Current Assets - Current Liabilities
    500000   - 300000
           
  = 200000      
           
Step 2          
Working Capital = Cost of Revenue / Working Capital
Turnover Ratio from operations    
  = 1000000   / 200000
  = 5 Times    
▶ Video Solution: Coming Soon
Question 117
Step 1            
Revenue from = Cash Sales + Credit Sales - Sales Return
operations 500000 + 600000 - 100000
  = 1000000        
             
Step 2            
Working Capital = Current Assets - Current Liabilities
    300000 - 100000    
  = 200000        
             
Step 2            
Working Capital = Revenue from / Working Capital  
Turnover Ratio operations      
    1000000 / 200000    
  = 5 Times      
▶ Video Solution: Coming Soon
Question 118
Step 1        
Let the revenue from operations 100    
Gross Profit 33.33    
         
Cost of Goods Sold 66.67    
         
Revenue from operations = 100 / 66.67 X 2000000
         
  = 3000000    
         
Step 2        
Working Capital = Current Assets - Current Liabilities
    1000000 - 250000
         
  = 750000    
         
Step 2        
Working Capital = Revenue from / Working Capital
Turnover Ratio operations  
    3000000 / 750000
  = 4.0 Times  
         
Note : Equity share capital given in the question is not relevant              
▶ Video Solution: Coming Soon
Question 119
Step 1                  
Revenue from operations = Cost of Revenue + Gross Profit    
         from operations    
        4000000 + 20% on Cost    
                   
      = 4000000 + 800000    
                   
      = 4800000          
Step 2
Liabilities     Amount Assets     Amount    
Capital Employed   1200000 Net Fixed Assets   800000    
(i.e. Share Cap + Debts)     Working Capital   400000    
        (Balancing Figure)        
                   
Total     1200000 Total     1200000    
Alternately, use the formula for working capital                  
Working Capital = Capital Employed - Net Fixed Assets          
WC = 1200000 - 800000          
Working Capital = 400000                  
Formula derivation (Only for understanding)      
Capital Employed + Current Liabilities = Total Liabilities        
and        
Net Fixed Assets + Current Assets = Total Assets        
Since , Total Liabilities = Total Assets,        
So,        
Capital Employed + Current Liabilities = Net Fixed Assets + Current Assets        
Taking CA and CL on one side        
Current Assets - Current Liabilities = Capital Employed - Net Fixed Assets        
Replace CA - CL by working capital        
Working Capital = Capital Employed - Net Fixed Assets                  
Step 3                  
Working Capital = Revenue from / Working Capital      
Turnover Ratio operations      
      4800000 / 400000      
    = 12 Times          
Note : As per information given in the question there are no current liabilities in the question                  
▶ Video Solution: Coming Soon
Question 120
Step 1
Liabilities     Amount Assets     Amount    
Shareholder funds   250000 Fixed Assets   375000    
Non Current Liabilities   500000 (Balancing Figure)        
Current Liabilities   250000 Current Assets   625000    
(Balancing Figure)                
Total     1000000 Total     1000000    
Alternate method :                  
Find Fixed Assets      
Non Current Assets + Current Assets = Total Assets      
(Fixed Assets)      
or      
Non Current Assets = Total Assets - Current Assets      
(Fixed Assets)      
    = 1000000 - 625000      
                   
    = 375000            
Find Current Liabilities                  
Total Liabilities = Total Assets  
    = 1000000  
                   
Shareholder + Non Current + Current = Total  
Funds Liabilities Liabilities Liabilities  
So,  
Current = Total - Non Current - Shareholder  
Liabilities Liabilities Liabilities Funds  
                   
    = 1000000 - 500000 - 250000  
                   
    = 250000            
Step 2                  
Working Capital = Current Assets - Current Liabilities      
      625000 - 250000      
                   
    = 375000            
Step 3                  
Working Capital = Revenue from / Working Capital      
Turnover Ratio operations      
      1500000 / 375000      
    = 4   Times        
▶ Video Solution: Coming Soon

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