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Ratio Analysis 4.15

2. Operating Expenses = Administration Expenses + Selling and Distribution Expenses or Other Expenses
(except Loss on Sale of Plant)
= ` 10,000 + ` 14,000 = ` 24,000.
3. Loss on Sale of Plant will be excluded because it is not an operating loss but loss because of sale of an asset.
Illustration 12.
Calculate following ratios from the given information:
(i) Quick Ratio, (ii) Gross Profit Ratio,
(iii) Inventory Turnover Ratio, (iv) Operating Ratio, and
(v) Debt to Equity Ratio.

STATEMENT OF PROFIT AND LOSS for the year ended 31st March, 2019
Particulars Note No. `
I. Income
Revenue from Operations 5,00,000
II. Expenses
Purchases of Stock-in-Trade 2,00,000
Change in Inventories of Stock-in-Trade 1 (30,000)
Employees Benefit Expenses 50,000
Finance Cost 25,000
Other Expenses 2 90,000
Total 3,35,000
III. Net Profit (I – II) 1,65,000
Notes to Accounts
1. Change in Inventories `
Stock-in-Trade—Opening 50,000
Less: Closing 80,000
(30,000)
2. Other Expenses
Administrative Expenses 20,000
Selling Expenses 30,000
Provision for Tax 40,000
90,000
BALANCE SHEET as at 31st March, 2019
Particulars Note No. `
I. EQUITY AND LIABILITIES
1. Shareholders’ Funds
(a) Share Capital 7,00,000
(b) Reserves and Surplus 1,11,000
2. Non-Current Liabilities
(a) Long-term Borrowings 1,40,000
(b) Long-term Provisions 10,000
3. Current Liabilities
(a) Short-term Borrowings (Bank Overdraft) 4,000
(b) Trade Payables 20,000
Total 9,85,000