From the following information of Karnavati Limited, calculate gross profit ratio and operating ratio:

| Particulars | Year 2019 (Rs.) |
|---|---|
| Sales | 15,00,000 |
| Cost of goods sold | 7,50,000 |
| Administrative expenses | 1,00,000 |
| Sales expenses | 2,50,000 |
| Depre

Question

From the following information of Karnavati Limited, calculate gross profit ratio and operating ratio:

| Particulars | Year 2019 (Rs.) |
|---|---|
| Sales | 15,00,000 |
| Cost of goods sold | 7,50,000 |
| Administrative expenses | 1,00,000 |
| Sales expenses | 2,50,000 |
| Depreciation | 1,00,000 |

OR

From the following information of Rajyash Co. Ltd., calculate debt-equity ratio:

| Particulars | Amount (Rs.) |
|---|---|
| Non-current assets | 28,00,000 |
| Current assets | 17,00,000 |
| Total liabilities | 15,00,000 |
| Creditors | 90,000 |
| Bills Payables | 40,000 |
| Outstanding expenses | 70,000 |

Accepted Answer

>

> [!TLDR]
> Gross Profit Ratio = 50%; Operating Ratio = 80%. OR — Debt-Equity Ratio = 13,00,000 : 30,00,000 = 0.43 : 1.
>
> **Main part — Karnavati Limited:**
>
> Gross Profit = Sales − Cost of goods sold = 15,00,000 − 7,50,000 = Rs 7,50,000.
>
> Gross Profit Ratio = (Gross Profit ÷ Sales) × 100 = (7,50,000 ÷ 15,00,000) × 100 = **50%**.
>
> Operating expenses = Administrative 1,00,000 + Sales expenses 2,50,000 + Depreciation 1,00,000 = Rs 4,50,000.
>
> Operating cost = Cost of goods sold + Operating expenses = 7,50,000 + 4,50,000 = Rs 12,00,000.
>
> Operating Ratio = (Operating cost ÷ Sales) × 100 = (12,00,000 ÷ 15,00,000) × 100 = **80%**.
>
> **OR — Rajyash Co. Ltd. (Debt-Equity Ratio):**
>
> | Particulars | Amount (Rs.) |
> |---|---|
> | Total assets = Non-current 28,00,000 + Current 17,00,000 | 45,00,000 |
> | Total (external) liabilities | 15,00,000 |
> | Current liabilities = Creditors 90,000 + Bills payable 40,000 + Outstanding expenses 70,000 | 2,00,000 | …

Component	Journal Entry (Debit/Credit)
Purchases	Debit Purchases A/c, Credit Cash/Supplier A/c
Salaries	Debit Salaries A/c, Credit Cash/Bank A/c
Depreciation	Debit Depreciation A/c, Credit Accumulated Depreciation A/c
Revenue from Operations	Debit Cash/Bank/Debtors A/c, Credit Revenue from Operations A/c

Concept understanding — Operating Ratio Calculation

Operating Ratio — A First Look

Precise Meaning (NCERT Definition)

Why It Matters

Accounting Treatment — Which Account is Debited/Credited?

Proforma / Format (as per NCERT) …

Part (a) — Cost of Revenue from Operations

Particulars	Year 2019 (Rs.)
Sales	15,00,000
Cost of goods sold	7,50,000
Administrative expenses	1,00,000
Sales expenses	2,50,000
Depreciation	1,00,000

Particulars	Amount (Rs.)
Non-current assets	28,00,000
Current assets	17,00,000
Total liabilities	15,00,000
Creditors	90,000
Bills Payables	40,000
Outstanding expenses	70,000

Particulars	Amount (Rs.)
Total assets = Non-current 28,00,000 + Current 17,00,000	45,00,000
Total (external) liabilities	15,00,000
Current liabilities = Creditors 90,000 + Bills payable 40,000 + Outstanding expenses 70,000	2,00,000

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