Question:
From the following information obtained from the books of KVK Ltd., calculate Net Assets Turnover Ratio and Debt Equity Ratio:
Information Table
Information Amount (₹) Preference Share Capital 8,00,000 Equity Share Capital 12,00,000 General Reserve 2,00,000 Balance in Statement of Profit and Loss 6,00,000 15% Debentures 4,00,000 12% Loan 4,00,000 Revenue from Operations 72,00,000
From the following information obtained from the books of KVK Ltd., calculate Net Assets Turnover Ratio and Debt Equity Ratio:
Information Table
| Information | Amount (₹) |
|---|---|
| Preference Share Capital | 8,00,000 |
| Equity Share Capital | 12,00,000 |
| General Reserve | 2,00,000 |
| Balance in Statement of Profit and Loss | 6,00,000 |
| 15% Debentures | 4,00,000 |
| 12% Loan | 4,00,000 |
| Revenue from Operations | 72,00,000 |
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Debt Equity Ratio helps assess risk; Net Asset Turnover shows efficiency of asset utilization.
Updated On: Sep 9, 2025
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Solution and Explanation
- Net Assets = Equity Share Capital + Reserves + Surplus + Preference Share Capital
⇒ 12,00,000 + 2,00,000 + 6,00,000 + 8,00,000 = 28,00,000 - Net Assets Turnover Ratio = Revenue from Operations / Net Assets
⇒ 72,00,000 / 28,00,000 = 2.57 times - Debt = Debentures + Loan
⇒ 4,00,000 + 4,00,000 = 8,00,000 - Equity = Equity Share Capital + Reserves + Surplus
⇒ 12,00,000 + 2,00,000 + 6,00,000 = 20,00,000 - Debt Equity Ratio = Debt / Equity
⇒ 8,00,000 / 20,00,000 = 0.4 : 1
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