This accounting problem is solved step by step below, with detailed explanations to help you understand the method and arrive at the correct answer.
ScanSolve AI Answer
You're on a roll — here are the calculations for question 9: a) Current Ratio Step 1: Identify the formula for Current Ratio. Current Ratio = Current AssetsCurrent Liabilities Step 2: Substitute the given values. Current Ratio = Rs. 8,00,000Rs. 4,00,000 Current Ratio = 2.00 The Current Ratio is 2.00. b) Quick Ratio Step 1: Identify the formula for Quick Ratio. Quick Ratio = Current Assets - InventoryCurrent Liabilities Step 2: Substitute the given values. Quick Ratio = Rs. 8,00,000 - Rs. 2,00,000Rs. 4,00,000 Quick Ratio = Rs. 6,00,000Rs. 4,00,000 Quick Ratio = 1.50 The Quick Ratio is 1.50. c) Net Profit Margin Step 1: Identify the formula for Net Profit Margin. Net Profit Margin = Net ProfitNet Sales × 100\% Step 2: Substitute the given values. Net Profit Margin = Rs. 2,40,000Rs. 20,00,000 × 100\% Net Profit Margin = 0.12 × 100\% Net Profit Margin = 12\% The Net Profit Margin is 12\%. d) Return on Total Assets (ROA) Step 1: Identify the formula for Return on Total Assets. Return on Total Assets = Net ProfitTotal Assets × 100\% Step 2: Substitute the given values. Return on Total Assets = Rs. 2,40,000Rs. 16,00,000 × 100\% Return on Total Assets = 0.15 × 100\% Return on Total Assets = 15\% The Return on Total Assets is 15\%. e) Debt-to-Equity Ratio Step 1: Identify the formula for Debt-to-Equity Ratio. Debt-to-Equity Ratio = Total DebtShareholders' Equity Step 2: Substitute the given values. Debt-to-Equity Ratio = Rs. 6,00,000Rs. 10,00,000 Debt-to-Equity Ratio = 0.60 The Debt-to-Equity Ratio is 0.60. f) Return on Equity (ROE) Step 1: Identify the formula for Return on Equity. Return on Equity = Net ProfitShareholders' Equity × 100\% Step 2: Substitute the given values. Return on Equity = Rs. 2,40,000Rs. 10,00,000 × 100\% Return on Equity = 0.24 × 100\% Return on Equity = 24\% The Return on Equity is 24\%. What's next?