Solution to Frame 8:
Note: At the end of group discussion, this portion shall be supplied to enable the
participants to compare their answers.
1990 1991
Computation of Ratios:
(a) Return on Capital Employed:
Profit before interest, & Tax 1020 1800
------------------------------ X 100 = ------ X 100 = ------- X 100
Average Capital Employed 3050 4100
= 33.44% = 43.90 %
(b) Current Ratio:
Current Assets 4100 5000
---------------------- = ------ = ------
Current Liabilities 1900 2600
= 2.16 = 1.92
(c) Debt Equity Ratio:
Debt 2000 2400
-------- = ------ = ------
Equity 1800 2000
= 1.11 = 1.20
(d) Fixed Assets Turnover Ratio:
Sales 4800 7200
--------------------------------- = ------ = -------
Average Fixed Assets (Net) 1740 1800
= 2.76 times = 4.00 times
(e) Inventory Turnover Ratio:
Cost of Goods Sold 3300 4800
------------------------ = ------ = ------
Average Inventory 1960 2600
= 1.68 times 1.85 times