Question

From the following data, calculate:

1. Gross Profit Ratio
2. Net Profit Ratio
3. Working Capital Turnover Ratio
4. Debt-Equity Ratio
5. Proprietary Ratio

	₹
Revenue from Operations	30,00,000
Cost of Revenue from Operations	20,00,000
Net Profit	3,00,000
Non-Current Assets	6,50,000
Current Assets	6,00,000
Current Liabilities	2,00,000
Paid-up Share Capital	5,00,000
Debentures	2,50,000

Answer 1

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

= ₹ 30,00,000 − ₹ 20,00,000

= ₹ 10,00,000

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

= `(₹ 10,00,000)/(₹ 30,00,000) xx 100`

= `33 1/3%`

(ii) Net Profit Ratio = `"Net Profit"/"Revenue from Operat10ns" xx 100`

= `(₹ 3,00,000)/(₹ 30,00,000) xx 100`

= 10%

(iii) Working Capital = Current Assets − Current Liabilities

= ₹ 6,00,000 − ₹ 2,00,000

= ₹ 4,00,000

Working Capital Turnover Ratio = `"Revenue from Operations"/"Working Capital"`

= `(₹ 30,00,000)/(₹ 4,00,000)`

= 7.5 Times

(iv) Long-term Debts = Debentures = ₹ 2,50,000

Total Assets = Non-Current Assets + Current Assets

= ₹ 6,50,000 + ₹ 6,00,000

= ₹ 12,50,000

Shareholder’s Funds = Total Assets − Debentures − Current Liabilities

= ₹ 12,50,000 − ₹ 2,50,000 − ₹ 2,00,000

= ₹ 8,00,000

Debt-Equity Ratio = `"Long term Debts"/"Shareholder’s Funds"`

= `(₹ 2,50,000)/(₹ 8,00,000)`

= 0.31 : 1

(v) Proprietary Ratio = `"Shareholder’s Fund"/"Total Assets"`

= `(₹ 8,00,000)/(₹ 12,50,000)`

= 0.64 : 1 or 64%