Page 80 - MA12

Ratio Analysis 4.25

Gross Profit
(ii) Gross Profit Ratio = × 100
Revenue from Operations (Net Sales)
` 2,25,000
= × 100 = 41.67%.
` 5,40,000
Gross Profit = Revenue from Operations (Net Sales) – Cost of Revenue from
Operations (Cost of Goods Sold)
= ` 5,40,000 – ` 3,15,000 = ` 2,25,000.
Revenue from Operations (Net Sales)
(iii) Working Capital Turnover Ratio =
Working Capital
` 5,40,000
= = 20.85 Times.
` 25,900
Working Capital = Current Assets – Current Liabilities
= ` 1,01,900 – ` 76,000 = ` 25,900.

Current Assets ` 1,01,900
(iv) Current Ratio = = = 1.34 : 1.
Current Liabilities ` 76,000
Current Assets (CA) = Inventories + Trade Receivables + Cash and Bank Balances
= ` 35,000 + ` 46,000 + ` 20,900 = ` 1,01,900.
Current Liabilities (CL) = Trade Payables + Short-term Provisions
= ` 34,000 + ` 42,000 = ` 76,000.

(v) Quick Ratio = Current Assets – Inventories
Current Liabilities

` 1,01,900 – ` 35,000
= = 0.88 : 1.
` 76,000
Net Profit after Tax
(vi) Net Profit Ratio = × 100
Revenue from Operations (Net Sales)
` 98,000
= × 100 = 18.15%.
` 5,40,000
Debt/Long-term Debt
(vii) Debt to Equity Ratio =
Equity
` 40,000
= = 0.14 : 1.
` 2,90,250 (WN 2)
Credit Revenue from Operations
(viii) Trade Receivables Turnover Ratio =
Average Trade Receivables
` 3,24,000 (i.e. , 60% of 5,40,000)
= = 6.48 Times.
` 50,000 [i.e. , 1/2 (54,000 + 46,000)]
Shareholders’ Funds/Equity ` 2,90,250
(ix) Proprietary Ratio = = = 0.71 : 1.
Total Assets ` 4,06,250