RATIO ANALYSIS

QUESTION 1
Items $ Items $

Opening Inventory 76 250 Sales 500 000

Purchases 315 250 Closing Inventory 98 500

Carriage and Freight 2 000

Wages 5 000

Gross Profit 200 000

598 500 598 500

Administration expenses 101 000 Gross Profit 200 000

Selling and Dist Expenses 12 000 Non-Operating Incomes:

Non-Operating Expenses 2 000 Interest 1 500

Financial Expenses 7 000 Dividend on Shares 3 750

Net Profit 84 000 Profit on sale of shares 750

206 000 206 000

Calculate:

a) Gross Profit Margin

b) Net Profit Margin

c) Inventory Turnover Ratio

QUESTION 2
The Statement of Financial Position of Punjab Auto Limited as on 31 December 2021 is
prepared as below.
Particulars $ Particulars $

Equity Share Capital 60 000 Plant and Machinery 24 000

Capital Reserve 8 000 Land and Buildings 40 000

8% loan on mortgage 32 000 Furniture and Fixtures 16 000

Account Payables 16 000 Closing Inventory 12 000

Bank Overdraft 4 000 Account Receivables 12 000

Investments (short term) 4 000

Cash in hand 12 000

120 000 120 000

Note:
Credit sales is 60% from the sales amount and credit purchases is 40% from the purchases
amount.

Calculate:
a) Current Ratio

b) Quick Ratio

c) Debt-Equity Ratio

d) Receivables Turnover Ratio (use information from Question 1)

e) Payables Turnover Ratio (use information from Question 1)