Question

1. Calculate the Gross Profit Ratio and Working Capital Turnover
Ratio from the following:
Revenue from Operations
Rs.30, 00,000
Cost of Revenue from Operations
Rs.20,00,000
Current Assets
Rs.6, 00,000
Current Liabilities
Rs.2, 00,000
Paid up Share Capital
Rs.5, 00,000

Answer 1

Answer:

Gross Profit Ratio = 3.3%

Working Capital Turnover = 7.5 times

Explanation:

Gross Profit Ratio = Gross Profit /Revenue from Operations(Net Sales)*100

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

                    = 30, 00,000-20,00,000

                   = 10,00,000

Gross Profit Ratio = 10,00,000/30, 00,000*100

                             =3.3

Working Capital Turnover = Revenue from Operations/

Working Capital

Working Capital =  Current Assets - Current Liabilities

= 6, 00,000-2, 00,000

=4,00,000

Working Capital = 30, 00,000/4,00,000 = 7.5 times