12th2025-2026

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%

 

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

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.

	₹			₹
Gross Profit	50,000		Revenue from Operations	1,00,000
Inventory	15,000		Trade Receivables	27,500
Cash and Cash Equivalents	17,500		Current Liabilities	40,000

 

Answer:

(i)

Gross Profit Ratio = Gross Profit /Revenue from Operations×100

Gross Profit Ratio = 50,000/1,00,000×100=50%

 

(ii)

Current Ratio = Current Assets/Current Liabilities

Current Ratio = Inventory + Cash and Cash Equivalents + Trade Receivables/Current Liabilities

Current Ratio=15,000+17,500+27,500/40,000

=1.5:1

 

(iii)

Liquid Ratio = Liquid Assets/Current Liabilities

Liquid Ratio = Cash and Cash Equivalents + Trade Receivables/Current Liabilities

Liquid Ratio = 17,500+27,500/40,000

=1.125:1

 

(iv)

Inventory Turnover Ratio = Cost of Goods Sold/Average Stock

Inventory Turnover Ratio = Revenue from Operations − Gross Profit/Average Stock Inventory 

 Turnover Ratio = 1,00,000 − 50,000/15,000

=3.33times

 

Calculate following ratios on the basis of the given information:

(i) Current Ratio; (ii) Acid Test Ratio; (iii) Operating Ratio; (iv) Gross Profit Ratio.

Current Assets	₹3,50,000;	Revenue from Operations (Sales)	₹6,00,000;
Current Liabilities	₹1,75,000;	Operating Expenses	₹2,00,000;
Inventory	₹1,50,000;	Cost of Revenue from Operations	₹3,00,000;

 

Answer:

(i)                Current Ratio;

Current Ratio= Current Assets/ Current Liabilities

Current Ratio= 3,50,000/1,75,000

Current Ratio= 2/1= 2:1

(ii)             Acid Test Ratio;

Acid Test Ratio= Quick Assets/ Current Liabilities

Quick Assets=3,50,000-1,50,000=2,00,000

Current Ratio= 2,00,000/1,75,000

Current Ratio= 1.14:1

(iii)           Operating Ratio;

Operating Cost = Operating Expenses + Cost of Revenue from Operations

Operating Cost =2,00,000+3,00,000=5,00,000

Operating ratio= Operation Cost/ Revenue from Operation

Operating ratio= 5,00,000×100/6,00,000=83.33%

(iv)           Gross Profit Ratio

Gross Profit = Revenue from Operations (Sales) - Cost of Revenue from Operations

Gross Profit = 6,00,000-3,00,00

Gross Profit = 3,00,000

Gross Profit Ratio= Gross Profit×100/ Revenue from Operations

Gross Profit Ratio= 3,00,000×100/6,00,000 =50%

From the information given below, calculate any three of the following ratio:

(i) Gross Profit Ratio;
(ii) Working Capital Turnover Ratio:
(iii) Debt to Equity Ratio; and 
(iv) Proprietary Ratio.

	₹			₹
Revenue from Operations (Net Sales)	5,00,000		Current Liabilities	1,40,000
Cost of Revenue from Operations (Cost of Goods Sold)	3,00,000		Paid-up Share Capital	2,50,000
Current Assets	2,00,000		13% Debentures	1,00,000

Answer:

(i)

Net Sales = 5,00,000

Cost of Goods Sold = 3,00,000

Gross Profit = Net Sales − Cost of Goods Sold

= 5,00,000 − 3,00,000 = 2,00,000

Gross Profit Ratio= Gross profit ×100/Net Sales

                   = 2,00,000×100/5,00,000

                   = 40%

(ii)

Current Assets = 2,00,000

Current Liabilities = 1,40,000

Working Capital = Current Assets − Current Liabilities

= 2,00,000 − 1,40,000 = 60,000

Working Capital turnover ratio= Net Sales / Working Capital

                                      =5,00,000/60,000

                                      =8.33 Times

(iii)

Long-term Debts = 13% Debentures = 1,00,000

Equity = Paid-up Share Capital = 2,50,000

Debt-Equity Rato= Long-term Debts/ Equity

                             =1,00,000/2,50,000

                             =0.4:1

(iv)

Total Assets = Total Liabilities

= Current Liabilities + Paid-up Share Capital + 13% Debentures

= 1,40,000 + 2,50,000 + 1,00,000

= 4,90,000

Propietary Ratio= Shareholders’ Fund/ Total Assets

                   =2,50,000/4,90,000

=0.51:1