Calculate Following Ratios From The Following Information: (i) Current Ratio (ii) Acid Test Ratio (iii) Operating Ratio (iv) Gross Profit Ratio

Calculate following ratios from the following information:

(i) Current ratio (ii) Acid test ratio (iii) Operating Ratio (iv) Gross Profit Ratio

Current Assets	Rs. 35,000
Current Liabilities	Rs. 17,500
Inventory	Rs. 15,000
Operating Expenses	Rs. 20,000
Revenue from Operations	Rs. 60,000
Cost of Goods Sold	Rs. 30,000

(i) Current ratio = `\frac{Current   Asset}{Current   Liabilities}`

    Current ratio = `\frac{35,000}{17,500}` = 2:1

(ii) Acid test ratio = `\frac{Liquid  Asset}{Current   Liabilities}`

   Liquid  Asset = Current Asset - Inventory

                         = 35,000 - 15,000 = 20,000

   Acid test ratio =  `\frac{20,000}{17,500}`

                         =  `\frac{1.143}{1}` = 1.143 : 1

(iii) Operating Ratio 

= `\frac{30,000+20,000}{60,000}\times100`

=` \frac{50,000}{60,000}\times100`

= 83.33 %

(iv) Gross Profit Ratio

Gross Profit = Net Revenue from Operations - Cost of Good Sold

                    = 60,000 - 30,000

                    = 30,000

 Gross Profit Ratio  = `\frac{30,000}{60,000}\times100`

                                = 50 %

Chapter-5 Accounting Ratios-II

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