Towards the end of previous year, the directors of A Ltd decided to expand the business. The annual accounts of the company for the previous year and current year are summarised as given:

You are infrormed that,

(a) all sales were from stocks in the company’s warehouse,

(b) the range of merchandise was not changed and buying prices remained steady throughout the 2 years,

(c) the stocks as on April 1 previous year was ₹40,000 and

(d) the debenture loan was received on April 1 current year and fixed assets were purchased on that date.
You are required to work out the following accounting ratios for both the years.
(i) Gross profit ratio (ii) Operating expenses to sales (iii) Operating profit ratio (iv) Capital turnover ratio (v) Stock turnover ratio (vi) Net profit to capital employed ratio and (vii) Debtors collection period (in days).
Your answer should give the figures calculated to one decimal place, together with possible reasons for changes in the ratios for 2 years. Ratios relating to capital employed should be based on the capital at the end of the year. Ignore taxation.

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Particulars Sales: Cash Credit Cost of goods sold Gross margin Expenses: Warehousing Transport Administration Selling Debenture interest Net profit Fixed assets (less depreciation) Current assets: Stock Debtors Cash Less: Current liabilities (trade creditors) Net current assets Share capital Reserves and undistributed profit Debentures Previous year *30,000 2,70,000 60,000 50,000 10,000 3,00,000 2,36,000 64,000 13,000 6,000 19,000 11,000 49,000 15,000 30,000 1,20,000 50,000 70,000 1,00,000 75,000 25,000 1,00,000 Current year *32,000 3,42,000 94,000 82,000 7,000 *3,74,000 2,98,000 76,000 14,000 10,000 19,000 14,000 2,000 59,000 17,000 40,000 1,83,000 76,000 1,07,000 1,47,000 75,000 42,000 30,000 1,47,000