Financial Statements

Ratios

Medium

Financial Statements

ABC Ltd has an average inventory of Rs. 20,000 at cost. If the Inventory Turnover Ratio is 8 times and the firm sells goods at a gross profit of 20% on sales. Calculate the gross profit of ABC Ltd.

Rs.32,000

Rs.16,000

Rs.40,000

Rs.36,000

✅ Correct Option: 3

Cost of goods sold $= 8 \times 20,000 = 1,60,000$ .

Gross profit is $20\%$ of sales, so cost is $80\%$ of sales: Sales $= \frac{1,60,000}{0.8} = 2,00,000$ .

Gross profit $= 2,00,000 - 1,60,000 = 40,000$ .

2026: 21 May Shift 1

Match List-I with List-II

List-I	List-II
(A) Inventories at the end and other current assets such as prepaid expenses, advance tax, etc. are not included in	(I) Advantage of Ratio Analysis
(B) Identification of problem areas	(II) Quick Assets
(C) Ratios are means to an end rather than the end by itself	(III) Current Ratio
(D) 2:1 is the benchmark of	(IV) Limitation of the ratios

Choose the correct answer from the options given below:

2022: 23 Aug Shift 2

If there is Revenue from Operation Rs. 1,20,000 and gross profit is 20% of cost, then the amount of gross profit will be :

2024

Calculate Average Collection Period.

2025: 3 June Shift 2

Calculate Gross profit ratio from following info

Revenue from operations	3,40,000
Cost of revenue from operations	1,20,000

2022: 20 July Shift 1

Make the right combination of the ratios that enables to find the short term liquidity.

(a) Return on Equity

(b) Acid Test Ratio

(d) Sacrificing Ratio

(e) Inventory Turnover Ratio

Choose the most appropriate answer from the options given below :

2025: 16 May Shift 1

Match List-I with List-II

List-I	List-II
(A) Liquidity Ratio	(I) Interest Coverage Ratio
(B) Profitability Ratio	(II) Acid-Test Ratio
(C) Solvency Ratio	(III) Fixed Assets Turnover Ratio
(D) Activity ratios	(IV) Return on Capital Employed Ratio

Choose the correct answer from the options given below:

Solution