On the basis of the above data, you are required to calculate the following ratios and interpret them as briefly as possible: 1) Current Ratio. 2) Gross Profit Ratio.

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Example 27: The following is the trading and profit and loss account of Mercury Ltd. for the year ending on 31"
March 2016, followed by the Balance Sheet of the company:
Trading and Profit and Loss Account
Particulars
Particulars
5,80,000 | By Sales
24,40,000 | By Closing Stock
To Opening Stock
30,00,000
To Purchases
6,20,000
To Gross Profit c/d
6,00,000
36,20,000
3,20,000| By Gross profit b/d
36,20,000
To General Expenses
6,00,000
To Net Profit
2,80,000
6,00,000
6,00,000
Balance Sheet
Liabilities
Assets
28,00,000| Fixed Assets
2,00,000 | Stock
1,40,000 | Debtors
6,00,000 | Bank
2,80,000 | Cash
40,20,000
22,00,000
Share Capital
Reserve and Surplus
6,20,000
Bank Overdraft
3,20,000
Creditors
8,00,000
Profit for the year
80,000
40,20,000
On the basis of the above data, you are required to calculate the following ratios and interpret them as briefly as
possible:
1) Current Ratio.
2) Gross Profit Ratio.
Transcribed Image Text:Example 27: The following is the trading and profit and loss account of Mercury Ltd. for the year ending on 31" March 2016, followed by the Balance Sheet of the company: Trading and Profit and Loss Account Particulars Particulars 5,80,000 | By Sales 24,40,000 | By Closing Stock To Opening Stock 30,00,000 To Purchases 6,20,000 To Gross Profit c/d 6,00,000 36,20,000 3,20,000| By Gross profit b/d 36,20,000 To General Expenses 6,00,000 To Net Profit 2,80,000 6,00,000 6,00,000 Balance Sheet Liabilities Assets 28,00,000| Fixed Assets 2,00,000 | Stock 1,40,000 | Debtors 6,00,000 | Bank 2,80,000 | Cash 40,20,000 22,00,000 Share Capital Reserve and Surplus 6,20,000 Bank Overdraft 3,20,000 Creditors 8,00,000 Profit for the year 80,000 40,20,000 On the basis of the above data, you are required to calculate the following ratios and interpret them as briefly as possible: 1) Current Ratio. 2) Gross Profit Ratio.
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