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 %
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