AccountingRatios2026-27

Question 176:

Opening Inventory ₹80,000; Purchases ₹4,30,900; Direct Expenses ₹4,000; Closing Inventory ₹1,60,000; Administrative Expenses ₹21,100; Selling and Distribution Expenses ₹40,000; Revenue from Operations, i.e., Net Sales ₹10,00,000. Calculate Inventory Turnover Ratio; Gross Profit Ratio; and Opening Ratio.

Answer:

(i)

Opening Inventory = 80,000

Closing Inventory = 1,60,000

Cost of Goods Sold = Opening Inventory + Purchases + Direct Expenses − Closing Inventory

= 80,000 + 4,30,900 + 4,000 − 1,60,000

= 3,54,900

Average Inventory= Opening Inventory+ Closing Inventory/2

=80,000+90,000/2

=1,20,000

Inventory Turnover Ratio= Cost of Goods Sold/ Average Inventory

=3,54,000/1,20,000

=2.96 Times

(ii)

Sales = 10,00,000

Gross Profit = Net Sales − Cost of Goods Sold

= 10,00,000 − 3,54,900 = 6,45,100

Gross Profit Ratio= Gross profit ×100/Net Sales

= 645000×100/10,00,000

=64.51%

(iii)

Operating Expenses = Administration Expenses + Selling and Distribution Expenses

= 21,100 + 40,000 = 61,100

Operating Cost = Cost of Goods Sold+ Operating Expenses

=3,54,900+61,100=4,16,000

Operating Ratio= Operating Cost/ Net Sales ×100

=4,16,000/10,00,000× 100

Operating Ratio = 41.6%

Question 177:

From the given information, calculate:

(a) Trade Receivables Turnover Ratio,

(b) Current Ratio.

Credit Revenue from Operations	80,00,000	10% Debentures	12,00,000
Debtors	25,00,000	Creditors	13,00,000
Bills Receivables	15,00,000	Bills Payable	7,00,000
Total Assets	50,00,000

(CBSE 2024)

Answer:

(a) Trade Receivables Turnover Ratio;

Trade Receivables Turnover Ratio= Credit Revenue from Operations ÷ Average Trade Receivable

Trade Receivables Turnover Ratio= 80,00,000 ÷ 40,00,000 = 2: 1

Average Trade Receivable = Debtors + Bills Receivables

Average Trade Receivable = 15,00,000 + 25,00,000 = 40,00,000

(b) Current Ratio;

Current Ratio= Current Assets ÷ Current Liabilities

Current Ratio= 40,00,000 ÷ 20,00,000

Current Ratio= 40,00,000 ÷ 20,00,000 = 2:1

Question 178:

From the following information obtained from the books of Kamal Ltd., calculate (i) Gross Profit Ratio and (ii) Net Profit Ratio:

	₹
Revenue from Operations	2,50,000
Purchases	1,05,000
Carriage Inwards	4,000
Salaries	30,000
Decrease in Inventory	15,000
Return Outwards	5,000
Wages	18,000

(CBSE 2020)

Answer:

(i) Gross Profit= Revenue- Net Purchase- Carriage Inwards- Wages- Decrease in Inventory

Gross Profit= 2,50,000- (1,05,000-5,000)- 4,0000 – 18,000-15,000

Gross Profit=1,13,500

Gross Profit=1,13,500×100/2,50,000 =45.20%

(ii) Net Profit= Gross Profit –Salaries

Net Profit= 1,13,000 – 30,000

Net Profit= 83,000

Net Profit=83,500×100/2,50,000 =33.20%

Question 179:

From the following information, calculate:

(i) Return on Investment Ratio.

(ii) Net Assets Turnover Ratio.

Particulars	₹
Net Profit after Interest and Tax	2,40,000
Tax	1,60,000
Net Fixed Assets: Property, Plant and Equipment and intangible Assets	10,00,000
Non-current Investments (Non-trade)	1,00,000
Equity Share Capital (Face Value 10 per share)	5,00,000
15% Preference Share Capital	1,00,000
Reserves and Surplus (including surplus of the year under consideration)	2,00,000
10% Debentures	4,00,000
Revenue from Operations	24,00,000

Answer:

(i) Return on Investment Ratio

Return on Capital Employed = Profit Before interest, tax and dividend/ Capital Employed×100

Return on Capital Employed (ROI)=4,40,000/12,00,000×100=36.67%

Working Note:

Interest =4,00,000×15/100=60,000

Profit Before interest= Profit after interest +Interest

Profit Before interest and tax=2,40,000+1,60,000+40,000=4,40,000

Capital Employed= Equity Share Capital +15% Preference Share Capital +Reserves and Surplus+10% Debentures

Capital Employed= 5,00,000+1,00,000+2,00,000+4,00,000=12,00,000

(ii) Net Assets Turnover Ratio

Net Assets Turnover Ratio = Revenue from Operations/ Fixed Assets (Net)

Net Assets Turnover Ratio = 24,00,000/12,00,000

Net Assets Turnover Ratio = 2 Times

Question 180:

Calculate following ratios on the basis of the following information:
(i) Gross Profit Ratio;
(ii) Current Ratio;
(iii) Acid Test Ratio; and
(iv) Inventory Turnover Ratio.