Question

From the following informations calculate:

1. Current Ratio
2. Quick Ratio
3. Operating Ratio
4. Gross Profit Ratio

	₹		₹
Current Assets	70,000	Operating Expenses	40,000
Current Liabilities	35,000	Revenue from Operations	1,20,000
Inventory	30,000	Cost of Revenue from Operations	60,000

Answer 1

(a) Current Ratio = `"Current Assets"/"Current Liabilities"`

= `(₹ 70,000)/(₹ 35,000)`

= 2 : 1

(b) Liquid Assets = Current Assets − Inventory

= ₹ 70,000 − ₹ 30,000

= ₹ 40,000

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

= `(₹ 40,000)/(₹ 35,000)`

= 1.14 : 1

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

= `(₹ 60,000  + ₹ 40,000)/(₹ 1,20,000) xx 100`

= `(₹ 1,00,000)/(₹ 1,20,000) xx 100`

= 83.33%

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

= ₹ 1,20,000 − ₹ 60,000

= ₹ 60,000

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

Gross Profit Ratio = `(₹ 60,000)/(₹ 1,20,000) xx 100`

= 50%