## From the information given below, calculate any three of the following ratio:(i) Gross Profit Ratio. (ii) Working Capital Turnover Ratio. (iii) Debt to Equity Ratio. (iv) Proprietary Ratio.

SOLUTION

(i) Net Sales = 5,00,000
Cost of Goods Sold = 3,00,000
Gross Profit = Net Sales − Cost of Goods Sold
= 5,00,000 − 3,00,000
= 2,00,000

Gross Profit Ratio = Gross profit × 100 / Net Sales
= 2,00,000×100 / 5,00,000
= 40%

(ii) Current Assets = 2,00,000
Current Liabilities = 1,40,000
Working Capital = Current Assets − Current Liabilities
= 2,00,000 − 1,40,000
= 60,000

Working Capital turnover ratio = Net Sales  / Working Capital
= 5,00,000 / 60,000
= 8.33 Times

(iii) Long-term Debts = 13%
Debentures = 1,00,000

Equity = Paid-up Share Capital = 2,50,000
Debt-Equity Ratio = Long-term Debts /  Equity
= 1,00,000 / 2,50,000
= 0.4:1

(iv) Total Assets = Total Liabilities
Total Liabilities = Current Liabilities + Paid-up Share Capital + 13% Debentures
= 1,40,000 + 2,50,000 + 1,00,000

= 4,90,000

Proprietary Ratio = Shareholders’ Fund /  Total Assets
= 2,50,000 / 4,90,000
= 0.51: 1