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✦ FREE LEARNING — CLASS 11 & 12 — CBSE · PSEB — ACCOUNTS · ECONOMICS · BST ✦
From the following information, calculate: (i) Gross Profit Ratio; (ii) Working Capital Turnover Ratio; and (iii) Proprietary Ratio.
| Paid-up Capital | 8,00,000 | Current Assets | 5,00,000 |
| Credit Sales | 3,00,000 | Current Liabilities | 2,90,000 |
| 9% Debentures | 3,40,000 | Cash Sales: 75% of Credit Sales | |
| Cost of Goods Sold | 6,80,000 | Net Profit for the year | 1,55,000 |
(i) Gross Profit Ratio
Cash Sales = 75% of Credit Sales = 75% × 3,00,000 = ₹2,25,000
Revenue from Operations = Credit Sales + Cash Sales = 3,00,000 + 2,25,000 = ₹5,25,000
Gross Profit = Revenue from Operations − Cost of Goods Sold = 5,25,000 − 6,80,000 = −₹1,55,000 (Gross Loss)
Gross Profit Ratio = −1,55,000 ÷ 5,25,000 × 100 = −29.52%
(ii) Working Capital Turnover Ratio
Working Capital = Current Assets − Current Liabilities = 5,00,000 − 2,90,000 = ₹2,10,000
Working Capital Turnover Ratio = Revenue from Operations ÷ Working Capital = 5,25,000 ÷ 2,10,000 = 2.5 times
(iii) Proprietary Ratio
Proprietary’s Fund = Paid-up Capital + Net Profit for the year = 8,00,000 + 1,55,000 = ₹9,55,000
Total Assets = Total Liabilities = Paid-up Capital + 9% Debentures + Net Profit for the year + Current Liabilities
= 8,00,000 + 3,40,000 + 1,55,000 + 2,90,000 = ₹15,85,000
Proprietary Ratio = Proprietary’s Fund ÷ Total Assets × 100 = 9,55,000 ÷ 15,85,000 × 100 = 60.25%
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.184 - 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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