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

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

Paid-up Share CapitalRs. 5,00,000
Current AssetsRs. 4,00,000
Revenue from OperationsRs. 10,00,000
13% DebenturesRs. 2,00,000
Current LiabilitiesRs. 2,80,000
Cost of Revenue from OperationsRs. 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



Location: India

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