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Calculate the Current Ratio, Quick Ratio, Net Profit Margin, and Return on Total Assets.

Accounting

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Answers

6 parts
a
2.00
b
1.50
c

12%12\%

d

15%15\%

e
0.60
f

24%24\%

Step-by-step solution

12 steps

here are the calculations for question 9:

Part a· 2 steps

Current Ratio

  1. Identify the formula for Current Ratio.

    Current Ratio=Current AssetsCurrent Liabilities\text{Current Ratio} = \frac{\text{Current Assets}}{\text{Current Liabilities}}
  2. Substitute the given values.

    Current Ratio=Rs. 8,00,000Rs. 4,00,000\text{Current Ratio} = \frac{\text{Rs. } 8,00,000}{\text{Rs. } 4,00,000} Current Ratio=2.00\text{Current Ratio} = 2.00

    The Current Ratio is 2.00\boxed{2.00}.

Part b1.50

Quick Ratio

  1. Identify the formula for Quick Ratio.

    Quick Ratio=Current Assets−InventoryCurrent Liabilities\text{Quick Ratio} = \frac{\text{Current Assets} - \text{Inventory}}{\text{Current Liabilities}}
  2. Substitute the given values.

    Quick Ratio=Rs. 8,00,000−Rs. 2,00,000Rs. 4,00,000\text{Quick Ratio} = \frac{\text{Rs. } 8,00,000 - \text{Rs. } 2,00,000}{\text{Rs. } 4,00,000} Quick Ratio=Rs. 6,00,000Rs. 4,00,000\text{Quick Ratio} = \frac{\text{Rs. } 6,00,000}{\text{Rs. } 4,00,000} Quick Ratio=1.50\text{Quick Ratio} = 1.50

    The Quick Ratio is 1.50\boxed{1.50}.

Part c

12%12\%

Net Profit Margin

  1. Identify the formula for Net Profit Margin.

    Net Profit Margin=Net ProfitNet Sales×100%\text{Net Profit Margin} = \frac{\text{Net Profit}}{\text{Net Sales}} \times 100\%
  2. Substitute the given values.

    Net Profit Margin=Rs. 2,40,000Rs. 20,00,000×100%\text{Net Profit Margin} = \frac{\text{Rs. } 2,40,000}{\text{Rs. } 20,00,000} \times 100\% Net Profit Margin=0.12×100%\text{Net Profit Margin} = 0.12 \times 100\% Net Profit Margin=12%\text{Net Profit Margin} = 12\%

    The Net Profit Margin is 12%\boxed{12\%}.

Part d

15%15\%

Return on Total Assets (ROA)

  1. Identify the formula for Return on Total Assets.

    Return on Total Assets=Net ProfitTotal Assets×100%\text{Return on Total Assets} = \frac{\text{Net Profit}}{\text{Total Assets}} \times 100\%
  2. Substitute the given values.

    Return on Total Assets=Rs. 2,40,000Rs. 16,00,000×100%\text{Return on Total Assets} = \frac{\text{Rs. } 2,40,000}{\text{Rs. } 16,00,000} \times 100\% Return on Total Assets=0.15×100%\text{Return on Total Assets} = 0.15 \times 100\% Return on Total Assets=15%\text{Return on Total Assets} = 15\%

    The Return on Total Assets is 15%\boxed{15\%}.

Part e0.60

Debt-to-Equity Ratio

  1. Identify the formula for Debt-to-Equity Ratio.

    Debt-to-Equity Ratio=Total DebtShareholders’ Equity\text{Debt-to-Equity Ratio} = \frac{\text{Total Debt}}{\text{Shareholders' Equity}}
  2. Substitute the given values.

    Debt-to-Equity Ratio=Rs. 6,00,000Rs. 10,00,000\text{Debt-to-Equity Ratio} = \frac{\text{Rs. } 6,00,000}{\text{Rs. } 10,00,000} Debt-to-Equity Ratio=0.60\text{Debt-to-Equity Ratio} = 0.60

    The Debt-to-Equity Ratio is 0.60\boxed{0.60}.

Part f

24%24\%

Return on Equity (ROE)

  1. Identify the formula for Return on Equity.

    Return on Equity=Net ProfitShareholders’ Equity×100%\text{Return on Equity} = \frac{\text{Net Profit}}{\text{Shareholders' Equity}} \times 100\%
  2. Substitute the given values.

    Return on Equity=Rs. 2,40,000Rs. 10,00,000×100%\text{Return on Equity} = \frac{\text{Rs. } 2,40,000}{\text{Rs. } 10,00,000} \times 100\% Return on Equity=0.24×100%\text{Return on Equity} = 0.24 \times 100\% Return on Equity=24%\text{Return on Equity} = 24\%

    The Return on Equity is 24%\boxed{24\%}.

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