From The Following Information, Calculate the Following Ratios: i) Quick Ratio ii) Inventory Turnover Ratio iii) Return on Investment:-ACCOUNTING RATIOS

From the following information, calculate the following ratios:
i) Quick Ratio
ii) Inventory Turnover Ratio
iii) Return on Investment

	Rs.
Inventory in the beginning	50,000
Inventory at the end	60,000
Revenue from operations	4,00,000
Gross Profit	1,94,000
Cash and Cash Equivalents	40,000
Trade Receivables	1,00,000
Trade Payable	1,90,000
Other Current Liabilities	70,000
Share Capital	2,00,000
Reserves and Surplus	1,40,000

(Balance in the Statement of Profit & Loss A/c)

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

 Quick Asset = Cash + Debtors

= 40,000 + 1,00,000 

= 1,40,000

Current Liabilities = Creditors + Outstanding Expenses

= 1,90,000 + 70,000

= 2,60,000

Quick Ratio =  `\frac{1,40,000}{2,60,000}`

                   = 7 : 13 = 0.54 : 1

(ii) Inventory Turnover Ratio 

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

= 4,00,000 - 1,94,000

= 2,06,000

= `\frac{50,000+60,000 }{2}`

= 55,000

Inventory Turnover Ratio =  `\frac{2,06,000 }{55,000}` = 3.74 times

Capital Employed = Equity Share Capital + Profit and Loss

= 2,00,000 + 1,40,000

= 3,40,000

Return On Investment =  `\frac{1,40,000 }{3,40,000}\times100`

= 41.17 %

Chapter-5 Accounting Ratios-II

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