Question

5. Gross profit Ratio, Net profit ratio, Operating ratio, Liquid ratio ​

Answer 1

*Gross profit ratio= (gross profit / sales)×100

*Net profit ratio = (Net profit / sales)×100

*Operating ratio (OR)= (Operating cost/ sales)×100

operation cost = cost of goods sold+administrative selling and distribution expenses

(or)

OR= Sale–Operating profit

Operating profit = Net sale – Operating cost

*Liquid ratio:

current ratio = current assets/current liabilities

ideal ratio = 2:1

Quick ratio = quick assets/current liabilities

ideal ratio = 1:1