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Question
Compute Gross Profit Ratio from the following information:
Revenue from Operations, i.e., Net Sales = ₹4,00,000; Gross Profit 25% on Cost.
Solution
Gross Profit = 25% on Cost
Let Cost = x
∴ Gross Profit = `x xx 25/100 = (25x)/100`
Sales = Cost + Gross Profit
`400000 = x + (25x)/100`
or,`400000 = (125x)/100`
or, `x = (400000 xx 100)/125 = 320000`
Cost = x = Rs 3,20,000
Gross Profit = Sales - Cost
= 400000 - 320000 = 80000
Gross Profit Ratio = `"Gross Profit"/"Net Sales" xx 100`
`=80000/400000 xx 100` = 20%
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Short Answer Question
The average age of inventory is viewed as the average length of time inventory is held by the firm for which explain with reasons.
Following is the Balance Sheet of Title Machine Ltd. as at March 31, 2017.
| Particulars |
Amount Rs. |
| I. Equity and Liabilities | |
|
1. Shareholders’ funds |
|
|
a) Share capital |
24,00,000 |
|
b) Reserves and surplus |
6,00,000 |
|
2. Non-current liabilities |
|
|
a) Long-term borrowings |
9,00,000 |
|
3. Current liabilities |
|
|
a) Short-term borrowings |
6,00,000 |
|
b) Trade payables |
23,40,000 |
|
c) Short-term provisions |
60,000 |
| Total | 69,00,000 |
| II. Assets | |
|
1. Non-current Assets |
|
|
a) Fixed assets |
|
|
Tangible assets |
45,00,000 |
|
2. Current Assets |
|
|
a) Inventories |
12,00,000 |
|
b) Trade receivables |
9,00,000 |
|
c) Cash and cash equivalents |
2,28,000 |
|
d) Short-term loans and advances |
72,000 |
| Total | 69,00,000 |
Calculate Current Ratio and Liquid Ratio.
From the following information calculate:
(i) Gross Profit Ratio (ii) Inventory Turnover Ratio (iii) Current Ratio (iv) Liquid Ratio (v) Net Profit Ratio (vi) Working capital Ratio:
|
|
Rs |
|
Revenue from Operations |
25,20,000 |
|
Net Profit |
3,60,000 |
|
Cast of Revenue from Operations |
19,20,000 |
|
Long-term Debts |
9,00,000 |
|
Trade Payables |
2,00,000 |
|
Average Inventory |
8,00,000 |
|
Current Assets |
7,60,000 |
|
Fixed Assets |
14,40,000 |
|
Current Liabilities |
6,00,000 |
|
Net Profit before Interest and Tax |
8,00,000 |
From the following, calculate (a) Debt Equity Ratio (b) Total Assets to Debt Ratio (c) Proprietary Ratio.
| Rs. | |
| Equity Share Capital | 75,000 |
| Preference Share Capital | 25,000 |
| General Reserve | 45,000 |
| Balance in the Statement of Profits and Loss | 30,000 |
| Debentures | 75,000 |
| Trade Payables | 40,000 |
| Outstanding Expenses | 10,000 |
Quick Assets ₹ 1,50,000; Inventory (Stock) ₹ 40,000; Prepaid Expenses ₹ 10,000; Working Capital ₹ 1,20,000. Calculate Current Ratio.
The Quick Ratio of a company is 0.8:1. State with reason, whether the following transactions will increase, decrease or not change the Quick Ratio:
(i) Purchase of loose tools for ₹2,000; (ii) Insurance premium paid in advance ₹500; (iii) Sale of goods on credit ₹3,000; (iv) Honoured a bills payable of ₹5,000 on maturity.
Balance Sheet had the following amounts as at 31st March, 2019:
| ₹ | ₹ | |||
| 10% Preference Share Capital | 5,00,000 | Current Assets | 12,00,000 | |
| Equity Share Capital | 15,00,000 | Current Liabilities | 8,00,000 | |
| Securities Premium Reserve | 1,00,000 | Investments (in other companies) | 2,00,000 | |
| Reserves and Surplus | 4,00,000 | Fixed Assets-Cost | 60,00,000 | |
| Long-term Loan from IDBI @ 9% | 30,00,000 | Depreciation Written off | 14,00,000 |
Calculate ratios indicating the Long-term and the Short-term financial position of the company.
From the following details, calculate Inventory Turnover Ratio:
| ₹ | |
| Cost of Revenue from Operations (Cost of Goods Sold) | 4,50,000 |
| Inventory in the beginning of the year | 1,25,000 |
| Inventory at the close of the year | 1,75,000 |
Calculate Inventory Turnover Ratio from the data given Below:
| Inventory in the beginning of the year | Rs 20000 |
| Inventory at the end of the year | Rs 10000 |
| Purchases | Rs 50,000 |
| Carriage Inwards | Rs 5000 |
| Revenue from Operations, i.e., Sales | Rs 100000 |
State the significance of this ratio.
Compute Trade Receivables Turnover Ratio from the following:
| 31st March 2018 (₹) | 31st March 2019 (₹) | |
| Revenue from Operations (Net Sales) | 8,00,000 | 7,00,000 |
| Debtors in the beginning of year | 83,000 | 1,17,000 |
| Debtors at the end of year | 1,17,000 | 83,000 |
| Sales Return | 1,00,000 | 50,000 |
From the following information, calculate Working Capital Turnover Ratio:
| ₹ | |
| Cost of Revenue from Operations (Cost of Goods Sold) | 10,00,000 |
| Current Assets | 5,00,000 |
| Current Liabilities | 3,00,000 |
Compute Gross Profit Ratio from the following information:
Cost of Revenue from Operations (Cost of Goods Sold) ₹5,40,000; Revenue from Operations (Net Sales) ₹6,00,000.
Liquid ratio is also known as ____________.
Current Ratio is ____________.
Debt-Equity Ratio can be calculated as ______?
Which ratios measure the firm's ability to meet its short-term obligations in time?
The ______ is useful in evaluating credit and collection policies.
Liquid ratio is also known as ______.
Payment of Income Tax is considered as:
Determine Return on Investment and Net Assets Turnover ratio from the following information:
Profits after Tax were ₹ 6,00,000; Tax rate was 40%; 15% Debentures were of ₹20,00,000; 10% Bank Loan was ₹ 20,00,000; 12% Preference Share Capital ₹ 30,00,000; Equity Share Capital ₹ 40,00,000 ; Reserves and Surplus were ₹ 10,00,000; Sales ₹ 3,75,00,000 and Sales Return ₹ 15,00,000.
