What will be the operating profit ratio, if operating ratio is 83.64%?
SOLUTION Operating Profit Ratio = 100 - Operating RatioOperating Profit Ratio = 100 - 83.64 = 16.36%
Current ratio of Reliance Textiles Ltd. is 1.5 at present. In future it wants to improve this ratio to 2. Suggest any two accounting transactions for improving the current ratio.
SOLUTIONReason:(i) Payment of current liabilities, (ii) Issue of share capital or raising long-term loan.
‘Sale of goods Rs. 3,000 for cash will increase the Gross Profit Ratio.’ Is this statement correct? Give reason in support of your answer. (C.B.S.E. 2020. Kolkata, Lucknow)
SOLUTION No.Reason: Sale of goods for cash will not affect the Gross Profit Ratio, as the sales and gross profit will increase by the same percentage.
‘Sale of goods Rs. 23,000 for cash will not affect the operating ratio.’ Is the statement correct? Give reason. (C.B.S.E. 2020. Rajasthan)
SOLUTION The statement is correct.Reason: The Revenue from Operations and the Cost of Revenue from Operations will increase by the same percentage.
‘Purchase of goods Rs. 35,000 for cash will increase the operating ratio.’ Is the statement correct? Give reasons.
SOLUTION No; There will be equal increase in Purchases and Closing Inventory and hence cost of Revenue from Operations will remain unchanged.
What is the difference between ‘Operating Profit’ and ‘Net Profit’?
SOLUTION Operating profit is arrived at after deducting only operating expenses from gross profit whereas net profit is arrived at after deducting all operating as well as non-operating expenses from…
The gross profit ratio of a company is 50%. Slate with reason whether the decrease in rent received by Rs. 15,000 will increase, decrease or not change the ratio.
SOLUTION Decrease in Rent received by Rs. 15,000 will not change the gross profit ratio because rent received does not affect gross profit.
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