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Question
Operating Cost ₹ 3,40,000; Gross Profit Ratio 20%; Operating Expenses ₹ 20,000. Calculate Operating Profit Ratio.
Solution
Cost of Revenue from Operations
=Operating Cost−Operating Expenses
=3,40,000 - 20,000 = Rs 3,20,000
Gross Profit =`(320000 xx 20)/80`= Rs 80000
Revenue from Operations=Cost of Revenue from Operations + Gross Profit
=3,20,000 + 80,000 =Rs 4,00,000
Operating Profit=Revenue from Operations - Operating Cost
=4,00,000 − 3,40,000 =Rs 60,000
Operating Profit Ratio = `"Operating Profit"/"Revenue from Operations" xx 100`
`= 60000 / 400000 xx 100 = 15 %`
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Short Answer Question
What are the various types of ratios?
The current ratio provides a better measure of overall liquidity only when a firm’s inventory cannot easily be converted into cash. If inventory is liquid, the quick ratio is a preferred measure of overall liquidity. Explain.
Calculate debt equity ratio from the following information:
|
|
Rs |
|
Total Assets |
15,00,000 |
|
Current Liabilities |
6,00,000 |
|
Total Debts |
12,00,000 |
Compute Gross Profit Ratio, Working Capital Turnover Ratio, Debt Equity Ratio and Proprietary Ratio from the following information:
|
|
Rs |
|
Paid-up Share Capital |
5,00,000 |
|
Current Assets |
4,00,000 |
|
Revenue from Operations |
10,00,000 |
|
13% Debentures |
2,00,000 |
|
Current Liabilities |
2,80,000 |
|
Cost of Revenue from Operations |
6,00,000 |
Calculate Inventory Turnover Ratio if:
Inventory in the beginning is Rs. 76,250, Inventory at the end is 98,500, Gross Revenue from Operations is Rs. 5,20,000, Sales Return is Rs. 20,000, Purchases is Rs. 3,22,250.
Current Liablilites of a company were ₹1,75,000 and its Current Ratio was 2:1. It paid ₹30,000 to a Creditor. Calculate Current Ratio after payment.
From the following information, calculate Proprietary Ratio:
|
Particulars |
Note No. |
Amount |
|
I. EQUITY AND LIABILITIES 1. Shareholders' Funds |
|
|
|
(a) Share Capital |
|
6,00,000 |
|
(b) Reserves and Surplus |
|
1,50,000 |
|
2. Current Liabilities |
|
|
|
(a) Trade Payables |
|
1,00,000 |
|
(b) Other Current Liabilities |
|
50,000 |
|
(c) Short-term Provisions (Provision for Tax) |
|
1,00,000 |
|
Total |
|
10,00,000 |
|
II. ASSETS |
|
|
|
1. Non-Current Assets |
|
|
|
Fixed Assets (Tangible Assets) |
|
5,00,000 |
|
2. Current Assets |
|
|
|
(a) Current Investments |
|
1,50,000 |
|
(b) Inventories |
|
1,00,000 |
|
(c) Trade Receivables |
|
1,50,000 |
|
(d) Cash and Cash Equivalents |
|
1,00,000 |
|
Total |
|
10,00,000 |
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 following information:
Opening Inventory ₹ 40,000; Purchases ₹ 3,20,000; and Closing Inventory ₹ 1,20,000.
State, giving reason, which of the following transactions would (i) increase, (ii) decrease, (iii) neither increase nor decrease the Inventory Turnover Ratio:
(a) Sale of goods for ₹ 40,000 (Cost ₹ 32,000).
(b) increase in the value of Closing Inventory by ₹ 40,000.
(c) Goods purchased for ₹ 80,000.
(d) Purchases Return ₹ 20,000.
(e) goods costing ₹ 10,000 withdrawn for personal use.
(f) Goods costing ₹ 20,000 distributed as free samples.
Following figures have been extracted from Shivalika Mills Ltd.
Inventory at the end of the year ₹ 1,00,000.
Inventory Turnover Ratio 8 times.
Selling price 25% above cost.
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 |
From the following information, calculate any two of the following ratios:
(ii) Debt to Equity Ratio; and
(iii) Operating Ratio.
On the basis of the following information calculate:
(ii) Working Capital Turnover Ratio.
| Information: | ₹ | ₹ | |||
| Revenue from Operations: | (a) Cash Sales | 40,00,000 | Paid-up Share Capital | 17,00,000 | |
| (b) Credit Sales | 20,00,000 | 6% Debentures | 3,00,000 | ||
| Cost of Goods Sold | 35,00,000 | 9% Loan from Bank | 7,00,000 | ||
| Other Current Assets | 8,00,000 | Debentures Redemption Reserve | 3,00,000 | ||
| Current Liabilities | 4,00,000 | Closing Inventory | 1,00,000 |
Current Ratio is ____________.
Items excluded in liquid assets are:
Which of the following are included in traditional classification of ratios?
- Liquidity Ratios
- Statement of Profit and loss Ratios
- Balance Sheet Ratios
- Profitability Ratios
- Composite Ratios
- Solvency Ratios
Debt-Equity Ratio can be calculated as ______?
Read the following information and answer the given question:
X Ltd. made a profit of 5,00,000 after consideration of the following items:
| ₹ | ||
| (i) | Goodwill written off | 5,000 |
| (ii) | Depreciation on Fixed Tangible Assets | 50,000 |
| (iii) | Loss on Sale of Fixed Tangible Assets (Machinery) |
20,000 |
| (iv) | Provision for Doubtful Debts | 10,000 |
| (v) | Gain on Sale of Fixed Tangible Assets (Land) | 7,500 |
Additional information:
| Particulars | 31.3.2019 (₹) |
31.3.2018 (₹) |
| Trade Receivables | 78,800 | 52,000 |
| Prepaid Expenses | 3,000 | 2,000 |
| Trade Payables | 51,000 | 30,000 |
| Expenses Payable | 20,000 | 34,000 |
How will goodwill written off be adjusted in the cash flow statement?
The ______ is useful in evaluating credit and collection policies.
