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Question
From the information given below, calculate any three of the following ratio:
(ii) Working Capital Turnover Ratio:
(iii) Debt to Equity Ratio; and
(iv) Proprietary Ratio.
| ₹ | ₹ | |||
| Revenue from Operations (Net Sales) | 5,00,000 | Current Liabilities | 1,40,000 | |
| Cost of Revenue from Operations (Cost of Goods Sold) | 3,00,000 | Paid-up Share Capital | 2,50,000 | |
| Current Assets | 2,00,000 | 13% Debentures | 1,00,000 |
Solution
(i)
Net Sales = 5,00,000
Cost of Goods Sold = 3,00,000
Gross Profit = Net Sales − Cost of Goods Sold
= 5,00,000 − 3,00,000 = 2,00,000
Gross Profit Ratio = `"Gross Profit"/"Net Sales" xx 100`
`= 200000/500000 xx 100 = 40%`
(ii)
Current Assets = 2,00,000
Current Liabilities = 1,40,000
Working Capital = Current Assets − Current Liabilities
= 2,00,000 − 1,40,000 = 60,000
Working Capital Turnover Ratio =`"Net Sales"/"Working Capital" = 500000/60000 = 8.33` times
(iii)
Long-term Debts = 13% Debentures = 1,00,000
Equity = Paid-up Share Capital = 2,50,000
Debt-Equity Ratio =`"Long-term Debts"/"Equity"`
`= 100000/250000 = 0.4 : 1`
(iv)
Total Assets = Total Liabilities
= Current Liabilities + Paid-up Share Capital + 13% Debentures
= 1,40,000 + 2,50,000 + 1,00,000
= 4,90,000
Proprietary Ratio =`"Shareholder's Funds"/"Total Assets"`
`= 250000/490000 = 0.51 : 1`
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| Total Debt | 2,50,000 |
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