Question

From the Following information calculate Gross Profit Ratio, Stock Turnover Ratio and Debtors Turnover Ratio.

$$\begin{array}{cc}\text{Items}& \text{Rs.}\\ \text{Sales}& 3,00,000\\ \text{Cost of Goods Sold}& 2,40,000\\ \text{Closing Stock}& 62,000\\ \text{Gross Profit}& 60,000\\ \text{Opening Stock}& 58,000\\ \text{Debtors}& 32,000\end{array}$$

Answer 1

$\left(i\right)\text{Gross Profit Ratio}=\frac{\text{Gross Profit}}{\text{Sales}}\times 100$

Gross Profit = Sales - Cost of Goods sold
= Rs. 3,00,000 - Rs. 2,40,000
= Rs. 60,000

$\text{Gross Profit Ratio}=\frac{Rs.60,000}{Rs.3,00,000}\times 100=20\%$

$\text{Stock Turnover Ratio}=\frac{\text{Cost of Goods Sold}}{\text{Average Stock}}$

$\text{Average Stock}=\frac{\text{Opening Stock + Closing Stock}}{2}$

$=\frac{Rs.58,000+Rs.62,000}{2}=\frac{Rs.1,20,000}{2}=Rs.60,000$

$\text{Stock Turnover Ratio}=\frac{Rs.2,40,000}{Rs.60,000}=4\text{times}$

$\left(iii\right)\text{Debtors Turnover Ratio}=\frac{\text{Net Sales}}{\text{Average Debtors}}=\frac{Rs.3,00,000}{Rs.32,000}$
$=9.375\text{Times}$