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9. Gross Profit Margin Goods Sold/Average Inventory Gross Profil Sales x 100 7,70,000/1.10,000 = 7 times 2,30,000/10,00,000 x 100 - 23% . PROBLEM 13.8 The financial data for two companies, Procell Lid and Venus Lid, are as follows: Particular Amount 1 Procall Lid Vanus id 12,500 3,000 94,500 19,500 6,500 82.000 91,500 1,05,500 7,500 2,07,000 2.62.000 Current assets Cash Short-term investments Accounts receivable Inventory Prepaid expenses Total current assets Fored assets Total Assets Current liabilities Other liabilities Equity shares: 110 per value (7,500 shares) 25 Par value and (10,000 Shares) Reserves and surplus Total Liabilities and Shareholder's Equity Market price per share of equity stock Selected Income Statement Data for the Current Year Net sales (all on credit) Cost of goods sold other expense Profit before interest and taxes Interest expense Net Income 9,500 225,000 2,62,000 4,87.000 1,83,000 1,50,000 1,69,000 1180 1,69,000 1,77,000 50,000 73,000 75,000 79,000 4,69,000 4,87,000 14 1 3,01,500 2,27,000 40,000 34,500 6,500 28,000 2.59,000 1,93,000 30,000 36,000 17,000 19,000 The investment strategy is to purchase the shares of companies that are financially strong and have low price caring ratio. Calculate the following ratios for both the companies for the current year and decide which company's stocks are better for an investment strategy. 1. Current ratio 3. Debtors turnover 2. Quick ratio 4. Inventory tumover 5. Debt-equity ratio 6. Times interest earned ratio 7. Return on total assets 8. Return on shareholder's equity 9. Earnings per share of equity shares 10. Price earnings ratio Solution

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