Question

From the following data, calculate:

1. Gross Profit Ratio
2. Operating Ratio
3. Net Profit Ratio
4. Inventory turnover Ratio
5. Current Ratio

	₹		₹
Revenue from Operations	25,20,000	Non-Current Assets	14,40,000
Cost of Revenue from Operations	19,20,000	Net worth	15,00,000
Operating Expenses	2,40,000	Debt (Long-Term)	9,00,000
Average Inventory	8,00,000	Current Liabilities	6,00,000

Answer 1

(i) Gross Profit = Revenue from Operations − Cost of Revenue from Operations

= ₹ 25,20,000 − ₹ 19,20,000

= ₹ 6,00,000

Gross Profit Ratio = `"Gross Profit"/"Revenue from Operations" xx 100`

= `(₹ 6,00,000)/(₹ 25,20,000) xx 100`

= 23.81%

(ii) Operating Ratio = `("Cost of Revenue from Operations" + "Operating Expenses")/"Revenue from Operations" xx 100`

= `(₹ 19,20,000  + ₹ 2,40,000)/(₹ 25,20,000) xx 100`

= `(₹ 21,60,000)/(₹ 25,20,000) xx 100`

= 85.71%

(iii) Net Profit = Gross Profit − Operating Expenses

= ₹ 6,00,000 − ₹ 2,40,000

= ₹ 3,60,000

Net Profit Ratio = `"Net Profit"/"Revenue from Operations" xx 100`

= `(₹ 3,60,000)/(₹ 25,20,000) xx 100`

= 14.29%

(iv) Inventory Turnover Ratio = `"Cost of Revenue from Operations"/"Average Inventory"`

= `(₹ 19,20,000)/(₹ 8,00,000)`

= 2.4 Times

(v) Total Assets = Net worth + Debt (Long-Term) + Current Liabilities

= ₹ 15,00,000 + ₹ 9,00,000 + ₹ 6,00,000

= ₹ 30,00,000

Current Assets = Total Assets − Non-Current Assets

= ₹ 30,00,000 − ₹ 14,40,000

= ₹ 15,60,000

Current Ratio = `"Current Assets"/"Current Liabilities"`

= `(₹ 15,60,000)/(₹ 6,00,000)`

= 2.6 : 1