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Question
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 |
Solution
(i) `"Gross Profit Ratio" = "Gross profit"/"Net Revenue from Operations"xx" 100`
`"Gross Profit " = "Net Revenue From Operations" - "Cost of revenue From Operatons"`
= `25,20,000 - 19,20,000`
= `6,00,000`
`"Gross Profit Ratio" = "6,00,000"/"25,20,000"xx" = 23.81`
(ii) `"Inventory Turnover Ratio" = "Cost of Revenue from Opearions"/"Average Inventory"`
=`"19,20,000"/"8,00,000"`
= `2.4 "times"`
(iii) `"Current Ratio " = "Current Assets"/"Current Liablities"`
`"Current Assets" = "Liquid assets" + "Inventory"`
= `7,60,000 + 8,00,000`
= `15,60,000`
`"Current Ratio" = "15,60,000"/"6,00,000" = 2.6/1 = 2.6 ; 1`
(iv) `"Liquid Ratio" = "Liquid Assets"/" Current Liablities"`
= `"7,60,000"/"6,00,000"`
= `1.27/1`
= `1.27 : 1`
(v) `"Net Profit Ratio" = "Net Profit"/"Net Revenue From operations"xx" 100`
= `"3,60,000"/"25,20,000"xx" 100`
= `14.28%`
(vi) `"Working capital ratio" = "Revenue from operations"/"working capital"`
`"working capital" = "current assets" - "current liablities"`
= `15,60,000 - 6,00,000`
= `9,60,000`
`"Working capital ratio" = "25,20,000"/"9,60,000"`
= `2.625"times"`
Note: There is a misprint in the question given in the textbook. The figure of Rs '760,000' represents the value of 'Liquid Assets' and not 'Current Assets'. The above solution has been worked out accordingly and the answer given as per the textbook is same as per the above solution.
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