Question

From the following information given below, calculate the following ratios:
a) Quick ratio
b) Stock turnover ratio
c) Debt equity ratio
d) Return on investment
Current Assets: Rs. 5,00,000; opening stock Rs. 50000;closing stock Rs. ,150,000;
cost of goods sold Rs. 12,00,000; gross profit Rs. 2,00,000; Indirect expenses Rs.
20,000; Equity share capital Rs. 7,00,000; 10% preference share capital Rs.3,00,000;
12% debentures Rs.2,00,000; current liabilities Rs. 2,00,000; General reserves Rs.
1,00,000.​

Answer 1

Answer:

Explanation :

1) Quick Ratio = 2.5 : 1

2) Stock turnover Ratio = 12 times

3) Debt Equity Ratio = 0.18 : 1

4) Return on Investments = 13.84%

Conclusion :

1) Quick Ratio is Good ( 2.5: 1) Compare with standard Ratio 1: 1

2) Stock turnover Ratio is good.

3) Debt Equity Ratio is not good ( 0.18 : 1) Compare with standard Ratio 2: 1

4) Return on Investment is Good.