Question

Calculate following ratios on the basis of the following information:
(i) Gross Profit Ratio;
(ii) Current Ratio;
(iii) Acid Test Ratio; and 
(iv) Inventory Turnover Ratio.

	₹			₹
Gross Profit	50,000		Revenue from Operations	1,00,000
Inventory	15,000		Trade Receivables	27,500
Cash and Cash Equivalents	17,500		Current Liabilities	40,000

Answer 1

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

= 50000/100000 xx 100 = 50 %

 

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

 

Current Ratio = `"(Inventory + Cash and Cash Equivalents + Trade Receivables)"/"Current Liabilities"`

 

Current Ratio = `(15000 + 17500 + 27500)/40000 = 1.5 : 1`

 

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

 

Liquid Ratio =`("Cash and Cash Equivalents + Trade Receivables")/"Current Liabilities"`

 

Liquid Ratio = `(17500 + 27500)/40000 = 1.125 : 1`

 

Inventory Turnover Ratio = `"Cost of Goods Sold"/"Average Stock"`

 

Inventory Turnover Ratio =`("Revenue from OPerations - Gross Profit")/"Average Stock"`

 

Inventory Turnover Ratio = `(100000 - 50000)/15000 = 3.33` times