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      Question

      A company has the following details for the financial

      year: • Net Profit: ₹50 lakhs • Total Sales: ₹500 lakhs • Current Assets: ₹200 lakhs • Current Liabilities: ₹100 lakhs • Inventory: ₹40 lakhs Based on this, which of the following is correctly calculated?
      A Net Profit Margin = 5% Correct Answer Incorrect Answer
      B Current Ratio = 2.5 Correct Answer Incorrect Answer
      C Quick Ratio = 1.6 Correct Answer Incorrect Answer
      D Inventory Turnover Ratio = 5 times Correct Answer Incorrect Answer
      E None of the above Correct Answer Incorrect Answer

      Solution

      • Net Profit Margin = (50 / 500) × 100 = 10%, so (a) is wrong • Current Ratio = 200 / 100 = 2, not 2.5 • Quick Ratio = (Current Assets – Inventory) / Current Liabilities = (200 – 40)/100 = 1.6 • Inventory Turnover Ratio requires COGS, which is not given Hence, (c) is correct.

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