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 AssetsRs. 35,000
Current LiabilitiesRs. 17,500
InventoryRs. 15,000
Operating ExpensesRs. 20,000
Revenue from OperationsRs. 60,000
Cost of Goods SoldRs. 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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