Calculate the Following Ratio On the Basis of Following Information: (i) Gross Profit Ratio (ii) Current Ratio (iii) Acid Test Ratio (iv) Inventory Turnover Ratio (v) Fixed Assets Turnover Ratio

Calculate the following ratio on the basis of following information:

(i) Gross Profit Ratio (ii) Current Ratio (iii) Acid Test Ratio (iv) Inventory Turnover Ratio (v) Fixed Assets Turnover Ratio

	Rs.
Gross Profit	50,000
Revenue from Operations	100,000
Inventory	15,000
Trade Receivables	27,500
Cash and Cash Equivalents	17,500
Current Liabilities	40,000
Land & Building	50,000
Plant & Machinery	30,000
Furniture	20,000

(i) Gross Profit Ratio

= `\frac{50,000}{1,00,000 }\times100` = 50%

 (ii) Current Ratio

= `\frac{Current Asset}{Current Liabilities }`

= Current Asset = Trade Receivables + Inventory + Cash and Cash Equivalents

                          = 27,500 + 15,000 + 17,500 

                         = 60,000

Current Ratio = `\frac{60,000}{40,000 }`

                       = 1.5 : 1

(iii) Acid Test Ratio

Liquid Assets = Current Assets - Inventory

                       = 60,000 - 15,000

                     

                       = 45,000

Acid Test Ratio = `\frac{45,000}{40,000 }`

                         = 1.125 : 1

(iv) Inventory Turnover Ratio

Cost of Revenue from Operations = Revenue from Operations - Gross Profit

= 1,00,000 - 50,000

= 50,000

∴ Their is no any beginning or ending Inventory given, So the  amount of inventory is assumed to be average inventory. 

∴ Average Inventory = 15,000

 Inventory Turnover Ratio = `\frac{50,000}{15,000 }` = 3.33 times

(v) Fixed Asset Turnover Ratio

Net Fixed Asset = Land and Building + Furniture + Plant and Machinery

= 50,000 + 20,000 + 30,000

= 1,00,000

Fixed  Asset Turnover Ratio = `\frac{1,00,000}{1,00,000 }` = 1:1

Chapter-5 Accounting Ratios-II

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