Q5 Illustration 4.5 On the basis of information given in Table and the information given below you are

required to calculate the following ratios: 1) Return on Assets

ii) Return on Equity Capital

iii) Return on owner's Equity

iv) Earnings per share

Additional information.

Capital:

5,000, 7% preference shares @ 100 each fully paid; 15,000 Equity shares @ 100 each fully paid Assets:

1-4-1987 Rs. 5,50,000 31-3-1988 Rs. 7,00,000

Dr Profit and Cr Loss Account 2,20,000 To Opening stock By sales 9,00,000 To purchases 6,00,000 By closing stock 3,00,000 To wages 1,60,000 To Gross profit c 11 2,20,000 12,00,000 12,00,000 To Administrative Expenses 40,000 By Gross profit b/d 2,20,000 45,000 By interest (from investment outside business) 40,000 To selling and Disuibution expenses To Non-operating expenses 40,000 By profit on sale of investment 40,000 To Na profit 1,75,000 3,00,000 3,00,000 Assume the rate of tax 40 per cent You are required to calculate: ) ii) iii) Gross profit Margin Ratio Net profit Margin Ratio Selling and Distribution Expenses Ratio