Fixed Assets ₹ 4,00,000, working Capital ₹ 2,00,000, Cost of Goods Sold ₹ 20,00,000, Gross Sold ₹ 20,00,000, Gross profit ₹ 4,00,000 .Calculate Captial Employed Trunover Ratio
Average Profit = Rs. 2,50,000
Overvaluation of Stock = Rs. 10,000
Actual Average Profit = Rs. 2,50,000 - Rs. 10,000 (Note) = Rs. 2,40,000
Normal Profit = Capital Employed (Investment)...
(a) Operating Profit Ratio = `("Operating Profit")/("Revenue from Operations")xx100 = ("Rs. 34,000")/("Rs. 2,00,000")xx100`
(b) Working Capital Turnover Ratio = `("Revenue from Operations")/("Working Capital") = ("Rs. 2,00,000")/("Rs. 50,000")`
= 4 Times....