Q1Managerial Economics & Financial Accounting

Question

The following trading and profit & loss Account of Fantasy Ltd. for the year 31/3/2000 is given below. | Particular | Rs. | Particular | Rs. | |---|---|---|---| | To opening stock | 76,250 | By sales | 5,00,000 | | " Purchases | 3,15,250 | " Closing stock | 98,500 | | " Carriage & Freight | 2,000 | | | | " Wages | 5,000 | | | | " Gross profit b/d | 2,00,000 | | | | | 5,98,500 | | 5,98,500 | | To Administratin expenses | 1,01,000 | By Gross profit b/d | 2,00,000 | | " Selling & Dist expenses | 12,000 | " Non-Operating incomes : | | | " Non - operating expenses | 2,000 | " Interest on securities | 1,500 | | " Financial Expenses | 7,000 | " Dividend profit on shares | 3,750 | | Net profit c/d | 84,000 | " Profit on sales of shares | 750 | | | 2,06,000 | | 2,06,000 | Calculate: 1. Gross profit Ratio. 2. Expenses Ratio. 3. Operating Ratio. 4. Net Profit Ratio. 5. Stock turnover Ratio.

Answer 1

Data Extraction: - Sales = 5,00,000 - Gross Profit = 2,00,000 - Net Profit = 84,000 - Operating Expenses = Admin (1,01,000) + Selling (12,000) = 1,13,000 - Cost of Goods Sold (COGS) = Sales - Gross Profit = 3,00,000 - Average Stock = (Opening 76,250 + Closing 98,500) / 2 = 87,375

1. Gross Profit Ratio: $= (Gross Profit / Sales) \times 100$ $= (2, 00, 000/5, 00, 000) \times 100 =$ $40%$

2. Expenses Ratio: $= (Operating Expenses / Sales) \times 100$ $= (1, 13, 000/5, 00, 000) \times 100 =$ $22.6%$

3. Operating Ratio: $= ((COGS + Operating Expenses) / Sales) \times 100$ $= ((3, 00, 000 + 1, 13, 000) /5, 00, 000) \times 100 = (4, 13, 000/5, 00, 000) \times 100 =$ $82.6%$

4. Net Profit Ratio: $= (Net Profit / Sales) \times 100$ $= (84, 000/5, 00, 000) \times 100 =$ $16.8%$

5. Stock Turnover Ratio: $= COGS / Average Stock$ $= 3, 00, 000/87, 375 =$ $3.43 times$

Q1Managerial Economics & Financial Accounting

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