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✦ FREE LEARNING — CLASS 11 & 12 — CBSE · PSEB — ACCOUNTS · ECONOMICS · BST ✦
Opening Inventory ₹80,000; Purchases ₹4,30,900; Direct Expenses ₹4,000; Closing Inventory ₹1,60,000; Administrative Expenses ₹21,100; Selling and Distribution Expenses ₹40,000; Revenue from Operations (Net Sales) ₹10,00,000. Calculate Inventory Turnover Ratio, Gross Profit Ratio, and Operating Ratio.
(i) Inventory Turnover Ratio
Cost of Goods Sold = Opening Inventory + Purchases + Direct Expenses − Closing Inventory
= 80,000 + 4,30,900 + 4,000 − 1,60,000 = ₹3,54,900
Average Inventory = (Opening Inventory + Closing Inventory) ÷ 2 = (80,000 + 1,60,000) ÷ 2 = ₹1,20,000
Inventory Turnover Ratio = 3,54,900 ÷ 1,20,000 = 2.96 times
(ii) Gross Profit Ratio
Gross Profit = Net Sales − Cost of Goods Sold = 10,00,000 − 3,54,900 = ₹6,45,100
Gross Profit Ratio = 6,45,100 ÷ 10,00,000 × 100 = 64.51%
(iii) Operating Ratio
Operating Expenses = Administrative Expenses + Selling and Distribution Expenses = 21,100 + 40,000 = ₹61,100
Operating Cost = Cost of Goods Sold + Operating Expenses = 3,54,900 + 61,100 = ₹4,16,000
Operating Ratio = 4,16,000 ÷ 10,00,000 × 100 = 41.6%
Accounting & Commerce Educator
Sarbjit Singh holds a B.Com and M.Com degree and has over 12 years of teaching experience in double entry bookkeeping, financial accounting, and business studies.
This guide covers "T.S. Grewal Class 12 Vol 3 Chapter 4 Q.174 - Accounting Ratios", focusing on key definitions, step-by-step concepts, applications, and revision guidelines relevant to Chapter 4 - Accounting Ratios.
It is primarily curated for Class 11 and Class 12 high school commerce, accounting, and economics students, as well as aspirants preparing for board exams or CA Foundation.
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