Compute Various Ratios

This text provides an example of how to compute various ratios, including gross profit ratio, operating ratio, net operating profit ratio, selling and distribution expense to sales ratio, and net profit ratio. The text also includes a question and answer about two companies, X Ltd. and Y Ltd., and their balance sheets.

Questions

1. What is the gross profit ratio for X Ltd.?
2. What is the operating ratio for X Ltd.?
3. What is the net operating profit ratio for X Ltd.?
4. What is the selling and distribution expense to sales ratio for X Ltd.?
5. What is the net profit ratio for X Ltd.?

Answers

1. The gross profit ratio for X Ltd. is 40%.
2. The operating ratio for X Ltd. is 77.50%.
3. The net operating profit ratio for X Ltd. is 22.50%.
4. The selling and distribution expense to sales ratio for X Ltd. is 22%.
5. The net profit ratio for X Ltd. is 22%.