Question

Calculate the following ratio on the basis of following information: 

1. Gross Profit Ratio 

2. Current Ratio 

3. Acid Test Ratio 

4. Inventory Turnover Ratio 

5. Fixed Assets Turnover Ratio

Answer 1

1. Gross Profit Ratio 

2. Current Ratio = \(\frac {\textit{Current assets}}{\textit{Current Liabilites}} \)

Current Assets = Inventory + Trade Receivables + Cash and Cash Equivalents
= 15,000 + 27,500 + 17,500 = 60,000
Current Ratio = 

3. Acid Test Ratio = \(\frac {\textit{Liquid assets}}{\textit{Current Liabilities}} \)

Liquid Assets = Current Assets – Inventory
= 60,000 – 15,000 = 45,000
Acid test ratio =