Compute Gross Profit Ratio, Working Capital Turnover Ratio, Debt Equity Ratio and Proprietary Ratio from the following information:- ACCOUNTING RATIO

Compute Gross Profit Ratio, Working Capital Turnover Ratio, Debt Equity Ratio and Proprietary Ratio from the following information:

Paid-up Share Capital	Rs. 5,00,000
Current Assets	Rs. 4,00,000
Revenue from Operations	Rs. 10,00,000
13% Debentures	Rs. 2,00,000
Current Liabilities	Rs. 2,80,000
Cost of Revenue from Operations	Rs. 6,00,000

Gross Profit ratio 

Gross Profit = Net Revenue from operations - Cost of revenue from Operations

= 10,00,000 - 6,00,000

= 4,00,000

Gross Profit Ratio = `\frac{4,00,000}{10,00,000 }  \times 100 = 40%`

Working capital Ratio 

Working Capital = Current Asset - Current Liabilities

= 4,00,000 - 2,80,000

= 1,20,000

Working Capital Ratio 

=  `\frac{10,00,000}{1,20,000 } `

= 8.33 times.

Debt equity Ratio = `\frac{Debt}{Equity } `

=  `\frac{2,00,000}{5,00,000} ` = 2:5 

= 0.4 : 1

Proprietary ratio 

Total Asset = Paid up Capital + Debentures + Current Liabilities

= 5,00,000 + 2,00,000 + 2,80,000

= 9,80,000

Proprietary Ratio = `\frac{5,00,000}{9,80,000 } `

= 25 : 49

= 0.51 : 1

Chapter-5 Accounting Ratios-II

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