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# Compute Gross Profit Ratio, Working Capital Turnover Ratio, Debt Equity Ratio and Proprietary Ratio from the Following Information: - Accountancy

ConceptTypes of Ratios

#### Question

Compute Gross Profit Ratio, Working Capital Turnover Ratio, Debt Equity Ratio and Proprietary Ratio from the following information:

 Rs Paid-up Share Capital 5,00,000 Current Assets 4,00,000 Revenue from Operations 10,00,000 13% Debentures 2,00,000 Current Liabilities 2,80,000 Cost of Revenue from Operations 6,00,000

#### Solution

"Gross Profit ratio" = "Gross profit"/"Net Revenue from operations"xx"100

"Gross profit" = "Net revenue from operations" - "Cost of revenue from operations"

= 10,00,000 - 6,00,000

= 4,00,000

"Gross profit ratio" = "4,00,000"/"10,00,000"xx" 100 = 40%

"Working capital ratio" = "Revenue from operaions"/"working capital"

"working capital" = "current assets" - "Current Liablities"

="4,00,000 - 2,80,000"

= 1,20,000

"working capital ratio" = "10,00,000"/"1,20,000"

= 8.33 "times".

"Debt equity ratio" = "Debt"/"equity"

= "2,00,000"/"5.00,000" = 2 : 5 = 0.4 : 1

"Proprietary Ratio"="shareholders funds"/"total assets"

"Total asset" = "Paid up Capital + Debentures + Current Liablities"

(:. "Total Liablities = Total assets")

=5,00,000 + 2,00,000 + 2,80,000

= 9,80,000

"Propriertary ratio" = "5,00,000"/"9,80,000" = 25:49 = 0.51 : 1

Is there an error in this question or solution?

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Solution Compute Gross Profit Ratio, Working Capital Turnover Ratio, Debt Equity Ratio and Proprietary Ratio from the Following Information: Concept: Types of Ratios.
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