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Calculate Following Ratios from the Following Information: (I) Current Ratio (Ii) Acid Test Ratio (Iii) Operating Ratio (Iv) Gross Profit Ratio - Accountancy

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ConceptTypes of Ratios

Question

Calculate following ratios from the following information:

(i) Current ratio (ii) Acid test ratio (iii) Operating Ratio (iv) Gross Profit Ratio

 

 

Rs

Current Assets

35,000

Current Liabilities

17,500

Inventory

15,000

Operating Expenses

20,000

Revenue from Operations

60,000

Cost of Goods Sold

30,000

 

Solution

i) `"Current Ratio" = "Current Assets"/"Current Liablities"`

`"Current Ratio" = "35,000"/"17,500" = 2 ; 1`

ii) `"Acid Test Ratio" = "Liquid Assets"/"Current Liablities"`

`"Liquid Assets" = "Current Assets" - "Inventory"`

                          = `"35,000 - 15,000"`

                          = `20,000`

`"Acid test ratio" = "20,000"/"17,500" = "1.143/1 = 1.143 : 1`

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

                                    =`("30,000 + 20,000")/"60,000"xx" 100`

                                     =`"50,000"/"60,000"xx" 100 = 83.33%`

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

`"Gross Profit " = "Net Revenue from Operations" - "Cost of goods Sold"`

                        = `60,000 - 30,000`

                        = `30,000`

`"Gross Profit Ratio" = "30,000"/"60,000"xx" 100 = 50%`

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Solution Calculate Following Ratios from the Following Information: (I) Current Ratio (Ii) Acid Test Ratio (Iii) Operating Ratio (Iv) Gross Profit Ratio Concept: Types of Ratios.
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