# From the Following Information Calculate: (I) Gross Profit Ratio (Ii) Inventory Turnover Ratio (Iii) - Accountancy

Numerical

From the following information calculate:

(i) Gross Profit Ratio (ii) Inventory Turnover Ratio (iii) Current Ratio (iv) Liquid Ratio (v) Net Profit Ratio (vi) Working capital Ratio:

 Rs Revenue from Operations 25,20,000 Net Profit 3,60,000 Cast of Revenue from Operations 19,20,000 Long-term Debts 9,00,000 Trade Payables 2,00,000 Average Inventory 8,00,000 Current Assets 7,60,000 Fixed Assets 14,40,000 Current Liabilities 6,00,000 Net Profit before Interest and Tax 8,00,000

#### Solution

(i) "Gross Profit Ratio" = "Gross profit"/"Net Revenue from Operations"xx" 100

"Gross Profit " = "Net Revenue From Operations" - "Cost of revenue From Operatons"

= 25,20,000 - 19,20,000

= 6,00,000

"Gross Profit Ratio" = "6,00,000"/"25,20,000"xx" = 23.81

(ii) "Inventory Turnover Ratio" = "Cost of Revenue from Opearions"/"Average Inventory"

="19,20,000"/"8,00,000"

= 2.4 "times"

(iii) "Current Ratio " = "Current Assets"/"Current Liablities"

"Current Assets" = "Liquid assets" + "Inventory"

= 7,60,000 + 8,00,000

= 15,60,000

"Current Ratio" = "15,60,000"/"6,00,000" = 2.6/1 = 2.6 ; 1

(iv)  "Liquid Ratio" = "Liquid Assets"/" Current Liablities"

= "7,60,000"/"6,00,000"

= 1.27/1

= 1.27 : 1

(v) "Net Profit Ratio" = "Net Profit"/"Net Revenue From operations"xx" 100

= "3,60,000"/"25,20,000"xx" 100

= 14.28%

(vi) "Working capital ratio" = "Revenue from operations"/"working capital"

"working capital" = "current assets" - "current liablities"

= 15,60,000 - 6,00,000

= 9,60,000

"Working capital ratio" = "25,20,000"/"9,60,000"

= 2.625"times"

Note: There is a misprint in the question given in the textbook. The figure of Rs '760,000' represents the value of 'Liquid Assets' and not 'Current Assets'. The above solution has been worked out accordingly and the answer given as per the textbook is same as per the above solution.

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#### APPEARS IN

NCERT Class 12 Accountancy - Company Accounts and Analysis of Financial Statements
Chapter 5 Accounting Ratios
Numerical Questions | Q 11 | Page 230