Following information of B ltd. is given:
Particulars
2018 2019
Revenue from operation 35,00,000 89,00,000
Gross profit
840000 1869000
Operating profit
4,90,000 10,68,000
'Current assets
11,20,000 16,14,000
Current liability
5,50,000 9,10,000
Ma Amit CE 0 of the company claims, that improved
in the profit & working capital is due to his
efficiency so he should be duly compensated
do you agree with him if not give lesson.
Answers
Answer:
working capital =current assets -current liabilities
2018=1120000 - 550000=570000
2019=1614000 - 910000=704000
Mr.Amit should not be compensated.
Explanation:
Statement showing comparison of Current Ratio and GP Ratio for 2 years
Particulars 2018 2019
Gross Profit 8,40,000 18,69,000
Revenue from Operations 35,00,000 89,00,000
GP Ratio 24% 21%
Current Assets 11,20,000 16,40,000
Current Liabilities 5,50,000 9,10,000
Current Ratio 2.036 1.802
- From the above comparison statement,it can be seen that the Company's Gross profit Ratio and Current ratio have declined under the supervision of Mr.Amit as CEO.
- Therefore,Mr.Amit should not be compensated for the results of current year 2019.