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Question
Calculate following ratios on the basis of the given information:
(i) Current Ratio;
(ii) Acid Test Ratio;
(iii) Operating Ratio; and
(iv) Gross Profit Ratio.
| ₹ | ₹ | |||
| Current Assets | 70,000 | Revenue from Operations (Sales) | 1,20,000 | |
| Current Liabilities | 35,000 | Operating Expenses | 40,000 | |
| Inventory | 30,000 | Cost of Goods Sold or Cost of Revenue from Operations | 60,000 |
Solution
(i)
Current Assets = 70,000
Current Liabilities = 35,000
Current Ratio = `"Current Assets"/"Current Liabilities "`
`= 70000/35000 = 2 : 1`
(ii)
Liquid Assets = Current Assets − Inventory
= 70,000 − 30,000 = 40,000
Acid Test Ratio = `"Liquid Assets"/"Current Liabilities" = 40000/35000 = 1.14 : 1`
(iii)
Net Sales = 1,20,000
Operating Cost = Cost of Goods Sold + Operating Expenses
= 60,000 + 40,000 = 1,00,000
Operating Ratio = `"Operating Cost"/"Net Sales" xx 100`
`= 100000/120000 xx 100 = 83.33%`
(iv)
Gross Profit = Net Sales − Cost of Goods Sold
= 1,20,000 − 60,000 = 60,000
Gross Profit Ratio = `"Gross Profit"/"Net Sales" xx 100`
`= 60000/120000 xx 100 = 50 %`
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|
Particulars |
₹ |
Particulars |
₹ | ||
|
Capital Employed |
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|
Current Liabilities |
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Investment (Trade) |
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|
|||
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STATEMENT OF PROFIT AND LOSS
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|
Particulars |
Note No. |
Amount (₹) |
| I. Revenue from Operations (Net Sales) |
6,00,000 |
|
| II. Expenses: | ||
|
(a) Purchases of Stock-in-Trade |
3,00,000 |
|
|
(b) Change in Inventory of Stock-in-Trade |
1 |
50,000 |
|
(c) Employees Benefit Expenses |
60,000 |
|
|
(d) Other Expenses |
2 |
45,000 |
| Total Expenses |
4,55,000 |
|
| III. Profit before Tax (I-II) |
1,45,000 |
|
| IV. Less: Tax |
45,000 |
|
| V. Profit after Tax (III-IV) |
1,00,000 |
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|
Particulars |
Amount (₹) |
| I. Change in Inventory of stock-in-Trade | |
|
Opening Inventory |
1,25,000 |
|
Less: Closing Inventory |
75,000 |
|
50,000 |
|
| 2. Other Expenses | |
|
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15,000 |
|
Miscellaneous Expenses |
30,000 |
|
45,000 |
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₹ |
||
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||
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|
Long-term Provision |
NIL |
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