(i) Gross profit ratio =\(\frac { Gross\quad profit }{ Revenue\quad from\quad operations } \) \(\times\) 100
Cost of revenue from operations = Purchases of stock-in-trade + Change in inventory + Direct expenses
= 8,500 - 500 + 0 = Rs.8,000
Gross profit = Revenue from operations - Cost of revenue from operations
= 10,000 - 8,000 = Rs.2,000
∴ Gross profit ratio =\(\frac { 2,000 }{ 8,000 } \) \(\times\) 100 = 25%
(ii) Net profit ratio =\(\frac { Net\quad profit\quad after\quad tax }{ Revenue\quad from\quad operations } \) \(\times\) 100
=\(\frac { 800 }{ 10,000 } \) \(\times\) 100 = 8%
(iii) Operating cost ratio =\(\\ \frac { Operating\quad cost }{ Revenue\quad from\quad operations } \) \(\times\) 100
Operating cost = Cost of revenue from operations + Operating expenses
Operating expenses Other expenses = Rs.1,200
Operating cost = 8,000 + 1,200 = Rs.9,200
∴ Operating cost ratio =\(\frac { 9,200 }{ 10,000 } \) \(\times\) 100 = 92%
(iv) Operating profit ratio = \(\frac { Operating\quad profit }{ Revenue\quad from\quad operations } \) \(\times\) 100
Operating profit = Revenue from operations - Operating Cost
= 10,000 - 9,200 = Rs.800
∴ Operating profit ratio = \(\frac { 800 }{ 10,000 } \) \(\times\) 100 = 8%

Common-size income statement of Vijay Ltd for the year ended 3st March 2017 and 31st March 2018

Particulars	Absolute amount 2016-17	Percentage of revenue from operations for 2016-17	Absolute amount 2017-18	Percentage of revenue from operations for 2017-18
	Rs.	Rs.	Rs.
Revenue from operations	4,00,000	100	6,00,000	100
Add: other income	50,000	12.50	1,50,000	25
Total revenue	4,50,000	112.50	7,50,000	125
Less: Expenses	5,00,000	125	3,00,000	50
Profit / Loss before tax	- 50,000	- 12.50	10,50,000	125
Less: Income Tax (40 %)	-	-	4,20,000	70
Profit before tax	- 50,000	- 12.50	6,30,000	55

Balance sheet as on 31'1 December 2018

Liabilities	Rs	Rs	Assets	Rs
Capital accounts:			Land	80,000
Sankar	50,000		Stock	20,500
Saleem	40,000		Debtors	30,000
Pandiyan	10,000	1,00,000	Cash at bank	14,000
General reserve		36,000	Profit and loss Ale (loss)	6,000
Sundry creditors		14,000
	1,50,000			1,50,000

(i) New partner sharing ratio:
Let the total profit be 1
New partner Kamala's share \(=\frac{1}{5}\)
Remaining share of Sheela and Neela \(=1-\frac{1}{5}=\frac{5-1}{5}=\frac{4}{5}\)
New share of Sheela = Remaining share x Sheela's old share
Sheela \(=\frac{4}{5}\times\frac{4}{7}=\frac{16}{35}\)
Neela \(=\frac{4}{5}\times\frac{3}{7}=\frac{12}{35}\)
Share of new partner:
Kamala \(=\frac{1}{5}\)
In order to equalize the denominator, multiply and divide Kamala's share by 7.
Kamala's share \(=\frac{1}{5}\times\frac{1}{7}=\frac{7}{35}\)
New profit sharing ratio of Sheela, Neela and Kamala \(=\frac{16}{35}:\frac{12}{32}=\frac{7}{35}\) that 16:12:7
ii. Sacrificing ratio:
Sacrifice = Old share - New share
Sheela's sacrifice \(=\frac { 4 }{ 7 } -\frac { 16 }{ 35 } =\frac { 15-12 }{ 35 } =\frac { 4 }{ 35 } \)
Neela's sacrifice \(=\frac { 3 }{ 7 } -\frac { 12 }{ 35 } =\frac { 15-12 }{ 35 } =\frac { 3 }{ 35 } \)
Sacrificing ratio \(=\frac { 4 }{ 35 } :\frac { 3 }{ 35 } =4:3\)

Dr.        Total Bills receivable account         Cr.

Particulars	Rs.	Particulars	Rs.
To Balance b/d	30,000	By Cash	25,000
To Total Debtors	30,000	By Balance c/d	35,000
(Balancing figure)	60,000		60,000

Dr. Total Bills payable account Cr.

Particulars	Rs.	Particulars	Rs.
To Cash	40,000	By Balance b/d	45,000
To Balance c/d	50,000	By Total creditors	45,000
		(Balancing figure)
	90,000		90,000

Dr.                                Total Debtors account                              Cr.

Particulars	Rs.	Particulars	Rs.
To Balance b/d	40,000	By Bad debts	2,000
To Sales	1,79,000	By Return inwards	4,000
(balancing figure)		By Discount allowed	3,000
		By Cash	1,00,000
		By Bills receivable	30,000
		(Transfer from bills receivable account)
		By Balance c/d	80,000
	2,19,000		2,19,000

Dr.                       Total Creditors account                    Cr.

Particulars	Rs.	Particulars	Rs.
To Discount received	5,000	By Balance b/d	50,000
To Cash	80,000	By Purchases	1,20,000
To Bills payable	45,000	(credit)
(transfer from bills		(Balancing figure)
payable account)
To Balance c/d	40,000
	1,70,000		1,70,000

Average profit \(=\frac{Total\ profit}{Number\ of\ years}\)
\(=\frac{20,000+25,000+24,000+23,000}{4}\)
\(\frac{92,000}{4}\)
Average profit =Rs.23,000
Average profit before adjusting fair remuneration of the partner = Rs.23,000
Less:
Fair remuneration of partners  =3,000
                                                         _____
Average profit                              =20,000
                                                         _____
Goodwill = Average profit x Number of years of purchase
=20,000x3= Rs. 60,000

Balance sheet as on 31^st March, 2018

Liabilities	Rs	Rs	Assets	Rs	Rs
Prize find	50,000		Prize fund investment		50,000
Add :
interest received on prize
fund investment	5,000
Add:
Donation for prize fund	10,000
	65,000
Less:
Prizes distributed
	6,000
		59,000

Balance sheet as on 31^st March 20

Liabilities	Rs	Assets	Rs
(balancing figure)	43,550	Cash in hand	19,550
(balancing figure)		Subscription outstanding	2,000
		Furniture	15,000
		Books	7,000
	43,550		43,550

Dr Income and Expenditure Account for the year ended 31^stMarch 2 Cr

Expenditure	Rs.	Rs.	Income	Rs.	Rs.
To Salary	3,000		By Subscriptions	26,500
Add: Outstanding	600	3,600	Add: Outstanding for 2015-16	1,700	28,200
To Newspapers		2,050	By Sale of old newspaper		1,250
To Rent		6,800	By Interest on fixed deposit	450
Add: Outstanding	1,200	8,000	Add: Accrued interest	900	1,350
To Loss on sale of
furniture (7000 - 5700)		1,300
To Surplus		24,850
(Excess of income over
expenditure)
		40,800			40,800

Balance sheet as on 31^st March, 2016

Liabilities	Rs.	Rs.	Assets	Rs.	Rs.
Salary outstanding		600	Cash in hand		11,200
Rent outstanding		1,200	Subscription outstanding
Subscription			for 2014 - 15	800
received in advance		500	(2000 - 1200)
Capital fund	43,550		for 2015 - 16	1,700	2,500
Add: Surplus	24850	68,400	Fixed depo		20,000
			Accrued interest on fixed
			deposit		900
			Furniture (15000-7000 + 10,500		18,500
			Books (7,000 + 10,600		17,600
		70,700			70,700

In the books of Kasthuri Ltd., Journal Entries

Date	Particulars		L.F.	Debit Rs.	Credit Rs.
	Bank A/c	Dr		30,000
	To Share application A/c				30,000
	(Application money for shares received)
	Share application A/c	Dr		20,000
	To Share capital A/c				20,000
	(Application money transferred to share capital)
	Share application A/c	Dr		10,000
	To Share allotment A/c				10,000
	(Excess application money adjusted towards allotment)
	Share allotment A/c	Dr		1,00,000
	To Share capital A/c				60,000
	To Securities premium A/c				40,000
	(Allotment money due)
	Bank A/c	Dr		90,000
	To Share allotment A/c				90,000
	(Allotment money received)
	Share first call A/c	Dr		40,000
	To Share capital A/c				40,000
	(First call amount due)
	Bank A/c	Dr		39,000
	To Share first call A/c				39,000
	(First call money received for shares)
	Share second and final call A/c	Dr		40,000
	To Share capital A/c				40,000
	(Second and final call amount due)
	Bank A/c	Dr		39,000
	To Share second and final call A/c				39,000
	(Second and final call money received for @ 19,500 shares)
	Share capital	Dr		5,000
	To Share first call A/c				1,000
	To Share second and final call A/c				1,000
	To Shares forfeited A/c				3,000
	(Forfeiture of 500 shares for non-payment first and second calls)
	Bank A/c	Dr		3,200
	Shares forfeited A/c	Dr		800
	To Share capital A/c				4,000
	(Reissue of forfeited shares)
	Shares forfeited A/c	Dr		1,600
	To Capital reserve A/c				1,600
	(Profit on reissue of forfeited shares transferred to capital reserve account)

Amount forfeited for 500 shares = Rs. 3,000
Amount forfeited for 400 shares = \(\frac{3000}{500}\) \(\times\) 400
                                             = 2,400
Less :
                   Loss on reissue = 400
Net gain transferred  to capital reserve = 2,000 

In the books of Saranya Ltd Journal entries Date Particulars    L.F  Debit Rs. Credit Rs.   Bank A/c (30,000 x 3)  Dr    90,000     To Equity share application A/c       90,000   (Application money received)           Equity share application A/c (20,000 x 3)  Dr   60,000     To Equity share capital A/c       60,000   (Transfer of share application money to share
capital)           Equity share application A/c (10000 x 3)  Dr   30,000     To Bank A/c       30,000   (Excess share application money refunded)           Equity share allotment A/c (20,000 x 4)  Dr   80,000     To Equity share capital A/c       80,000   (share allotment money due)           Bank A/c  Dr   80,000     To Equity share allotment A/c       80,000   (Allotment money received)           Equity share first and final call A/c  Dr   60,000     To Equity share capital A/c       60,000   (share first and final call money due)           Bank A/c  Dr   60,000     To Equity share first and final call A/c       60,000   (share first and final money received)        

(i) When final call money is not paid

In the books of Keerthiga Company Journal entries

Date	Particulars		L.F.	Debit Rs.	Credit Rs.
	Equity share capital A/c (50 × 10)	Dr.		500
	To Equity share second and final call A/c (50 × 3)				150
	To Forfeited shares A/c (50 × 7)				350
	(50 shares forfeited)

Note: Since the premium amount is received by the company, premium should not be cancelled
(ii) When allotment, first call money and second and final call money is not paid

Date	Particulars		L.F.	Debit Rs.	Credit Rs.
	Share capital A/c (50 × 10)	Dr.		500
	Share premium A/c (50 × 1)	Dr.		50
	To Share allotment A/c (50 × 3)				150
	To Share first call A/c (50 × 3)				150
	To Share second and final call A/c (50 × 3)				150
	To Shares forfeited A/c (50 × 2)				100
	(50 shares forfeited)

(iii) When allotment and first call money is not paid

Date	Particulars		L.F	Debit Rs.	Credit Rs.
	Share capital A/c (50 × 7)	Dr.		350
	Share premium A/c (50 × 1)	Dr.		50
	To Share allotment A/c (50 × 3)				150
	To Share first call A/c (50 × 3)				150
	To Shares forfeited A/c (50 × 2)				100
	(50 shares forfeited)

Analysis of transactions, passing journal entries, identification of voucher type and group:

S.NO.	Particulars		Debit Rs.	Credit Rs.	Voucher type	Group
(1)	Cash A/c	Dr.	1,00,000		Receipt	Cash -in -Hand
	To Robert’s Capital A/c			1,00,000	Voucher	Capital Account
(2)	State Bank of India A/c	Dr.	30,000		Contra	Bank Accounts
	To Cash A/c			30,000	Voucher	Cash-in-Hand
(3)	Furniture A/c	Dr.	10,000		Payment	Fixed Assets
	To Cash A/c			10,000	Voucher	Cash-in-Hand
(4)	Purchases A/c	Dr.	20,000		Purchase	Purchase Accounts
	To Mohaideen A/c			20,000	Voucher	Sundry Creditors
(5)	Cash A/c	Dr.	8,000		Sales	Cash-in-Hand
	To Sales A/c			8,000	Voucher	Sales Accounts
(6)	Purchases A/c	Dr.	5,000		Purchase	Purchase Accounts
	To Cash A/c			5,000	Voucher	Cash-in-Hand
(7)	Rony A/c	Dr.	60,000		Sales	Sundry Debtors
	To Sales A/c			60,000	Voucher	Sales Accounts
(8)	Cash A/c	Dr.	9,000		Contra	Cash-in-Hand
	To Bank A/c			9,000	Voucher	Bank Accounts
(9)	Mohaideen A/c	Dr.	10,000		Payment	Sundry Creditors
	To Bank A/c			10,000	Voucher	Bank Accounts
(10)	Cash A/c	Dr.	5,000		Receipt	Cash -in -Hand
	To Arun A/c			5,000	Voucher	Sundry Debtors
(11)	Salaries A/c	Dr.	6,000		Payment	Indirect Expenses
	To Bank A/c			6,000	Voucher	Bank Accounts
(12)	Wages A/c	Dr.	3,000		Payment	Direct Expenses
	To Cash A/c			3,000	Voucher	Cash-in-Hand
(13)	Stationery A/c	Dr.	4,000		Journal	Indirect Expenses
	To Pandian Ltd. A/c			4,000	Voucher	Sundry Creditors

Following steps are to be followed to enter the transaction in Tally ERP 9
1. To create company
Company Info > Create Company
Type the Name as Robert and keep all other fields as they are and choose ‘Yes’ to accept.

2. To maintain accounts only
Gateway of Tally > F11 Accounting Features > General > Maintain accounts only: Yes > Accept> Yes

3. To Create ledger accounts
Gateway of Tally > Masters > Accounts Info > Ledgers > Single Ledger > Create

(i) To Create Devi's Capital A/c
Name: Devi's Capital A/c
Under Capital Account
Accept: Yes

(ii) To Create Indian Bank A/c
Name: Indian Bank A/c
Under: Bank Accounts
Accept: Yes

(iii) To Create Furniture A/c
Name: Furniture A/c
Under: Fixed Assets
Accept: Yes

(iv) To Create Purchases A/c
Name: Purchases A/c
Under: Purchase
Accept: Yes

(v) To Create Mohaideen A/c
Name: Mohaideen A/c
Under: Sundry Creditors
Accept: Yes

(vi) To Create Sales A/c
Name: Sales A/c
Under: Sales Account
Accept: Yes

(vii) To create Rony A/c
Name: Rony A/c
Under: Sundry Debtors
Accept: Yes

(viii) To create Salaries A/c
Name: Salaries A/c
Under: Indirect Expenses
Accept: Yes

(ix) To create Wages A/c
Name: Wages A/c
Under: Direct Expenses
Accept: Yes

(x) To create Stationery A/c
Name: Stationery A/c
Under: Indirect Expenses
Accept: Yes

(xi) To create Pandian Ltd. A/c
Name: Pandian Ltd. A/c
Under:Sundry Creditors
Accept: Yes

4. To enter transactions through vouchers
Gateway of Tally > Transactions > Accounting Vouchers
(i) Robert commenced a transport business with a capital of Rs. 1,00,000
F6: Receipt Voucher: Accounts: Cash
Particulars: Robert Capital A/c (Choose from List of Ledgers Accounts)
Enter the amount of Capital Rs. 1,00,000
Narration: Capital Introduced
Accept: Yes

(ii) An account was opened with State Bank of India and deposited Rs. 30,000
F4: Contra Voucher
Accounts: State Bank of India
Particulars: Cash
Amount: Rs. 30,000
Narration: Opened bank account in SBI
Accept: Yes

(iii) Purchased Furniture by paying cash Rs. 10,000
F5: Payment Vouchers
Account: Cash
Particulars: Furniture A/c
Amount: Rs. 15,000
Narration: Furniture bought by Cash
Accept: Yes

4 Goods purchased on credit from Mohaideen for Rs. 20,000
F9: Purchase voucher
Party A/c name: Mohaideen A/c
Particulars: Purchases A/c
Amount: Rs. 20,000
Narration: Goods purchased on
credit from Mohaideen
Accept Yes

(5) Cash sales made for Rs. 8,000
F8: Sales Voucher,
Account: Cash
Particulars: Sales A/c
Amount: Rs. 8,000
Narration: Cash Sales Mode
Accept: Yes

(6) Goods purchased from Rathinam for Rs. 5,000 and money deposited in CDM
F9: Purchase Voucher
Account: Bank
Particulars: Purchase A/c
Amount: Rs. 5,000
Narration: Goods Purchased

(vii) Goods sold to Rony on credit for Rs. 60,000
F8: Sales Voucher
Party: A/c Name: Rony A/c
Particulars: Sales A/c
Amount: Rs. 70,000
Narration: Goods sold on credit to Rony
Accept: Yes

(viii) Money withdrawn from bank for office use Rs. 9,000
F4: Contra Voucher
Account: Cash
Particulars: State Bank of India A/c
Amount: Rs. 9,000
Narration: Cash withdrawn from bank
Accept: Yes

(ix) Part payment of Rs 10,000 to Mohaideen by cheque
F5: Payment Vouchers
Account: State Bank of India
Particulars: Mohaideen A/c
Amount: Rs.10,000
Narration: Payment made to
Mohaideen by cheque
Accept Yes

(x) Rony made part payment of Rs. 5,000 by cash
F6: Receipt voucher
Account: Cash
Particulars: Rony A/c
Amount: Rs. 5,000
Narration: Cash received from Rony
Accept Yes.

(xi) Salaries Paid to Staff through ECS Rs. 6,000
F5: Payment Vouchers
Account: Indian Bank
Particulars: Salaries A/c
Amount: Rs 6,000
Narration: Salaries paid through ECS,
Accept: Yes

(xii) Wages of Rs. 3,000 paid by cash
F5: Payment voucher
Account: Cash
Particulars: Wages A/c
Amount: Rs. 3,000
Narration: Wages paid by cash
Accept Yes

(xiii) Purchased stationery from Pandian Ltd. on credit Rs.4,000
F7: Journal Voucher
Particulars: Computer A/c
Account: Muthu Ltd.
Amount: Rs. 4,000
Narration: Stationery bought on credit from Pandian Ltd.
Accept: Yes

To view reports
(i) To view Trial Balance
Gateway of Tally > Reports > Display > Trial Balance > Alt + F1 (detailed)

(ii) To view profit and loss Account
F10: A/c Reports > Profit & Loss A/c > Alt + F1 (detailed) or
Gateway of Tally > Reports > Profit & Loss A/c Alt + F1 (detailed)

(iii) To view Balance sheet
F10: A/c Reports > Balance sheet > Alt + F1 (detailed)
Gate of Tally > Reports > Balance Sheet > Alt + F1 (detailed)

(iv) To view Ratio Analysis
F10: A/c Reports > Ratio Analysis (or)
Gateway of Tally > Reports > Ratio Analysis

(v) To view Day book
F10: A/c Reports > Day Book > Alt + F1 (detailed (or)
Gateway of Tally > Reports > Display > Day Books > Alt + F1 (detailed)

Dr. In the books of Mary Total Debtors account Cr. Particulars Rs. Particulars Rs To Balance b/d 1,30,000 By Cash (received) 3,40,000 To Sales (Credit) 2,90,000 By Balance c/d 80,000     (balancing figure)     4,20,000   4,20,000 To Balance b/d 80,000     Dr. Trading and Profit and loss account for the year ended 31^st March 2019 Cr. Particulars Rs. Rs. Particulars Rs. Rs To Opening stock   1,10,000 By Sales     To Purchases     Cash 3,60,000   Cash 1,50,000   Credit 2,90,000 6,50,000 Credit 1,80,000 3,30,000 By Closing stock   1,80,000 To Wages   70,000       To Gross profit c/d   3,20,000           8,30,000     8,30,000 To Sundry expenses   1,27,000 By Gross profits b/d   3,20,000 To Depreciation on machinery 10%   8,000       To Net profit transfered to capital a/c   1,85,000           3,20,000     3,20,000 Balance sheet as on 31^st March 2019 Liabilities Rs. Rs. Assets Rs. Rs Capital 2,80,000   Cash   2,23,000 Add: Net profit 1,85,000 4,65,000 Stock of goods   1,80,000       Debtors   80,000 Creditors   90,000 Furniture and fittings 80,000         Less: Depreciation 8,000 72,000     5,55,000     5,55,000

In the books of Arjun Statement of affairs as on 1^st April, 2018

Liabilities	Rs.	Assets	Rs.
Creditors	5,000	Cash at bank	4,000
Opening capital	30,000	Stock	9,000
(balancing figure)		Sundry debtors	2,000
		Plant and machinery	20,000
	35,000		35,000

Dr.           Total creditors account                       Cr.

Particulars	Rs.	Particulars	Rs.
To Cash A/c (paid)	64,000	By Balance b/d	5,000
To Purchases returns	2,000	By Purchases A/c (credit)	65,000
To Balance c/d	4,000	(balancing figure)
	70,000		70,000

Dr. Trading and Profit and Loss Account for the year ended 31^st March, 2019 Cr.

Particulars		Rs.	Particulars		Rs.
To Opening stock		9,000	By Sales	85,000
To Purchases			Less Returns	1,000	84,000
Credit	65,000		By Closing stock		16,000
Less Returns	2,000	63,000
To Carriage inwards		8,000
To Gross profit c/d		20,000
		1,00,000			1,00,000
To Advertising		4,700	By Gross Profit b/d		20,000
To Depreciation on machinery		1,000
To Provision for doubtful debts		300
To Net profit transferred to capital a/c		14,000
		20,000			20,000

Balance Sheet as on 31^st March, 2019

Liabilities	Rs.	Rs.	Assets	Rs.	Rs.
Capital	30,000		Cash at bank		6,000
Add: Net profit	14,000		Stock		16,000
	44,000		Sundry debtors	5,300
Less: Drawings	2,000	42,000	Less: Provision	300	5,000
Sundry creditors		4,000	Plant and Machinery	20,000
			Less: Depreciation	1,000	19,000
		46,000			46,000

Dr.                    Bills receivable account                               Cr.

Particulars	Rs	Particulars	Rs
To Balance b/d	5,000	By Cash A/c	14,000
To Debtors A/c	11,200	By Debtors A/c	1,200
(Bills received - balancing figure )		(bills receivable dishonoured) By Balance c/d	1,000
	16,200		16,200

Dr. Total debtors account Cr.

Particulars	Rs	Particulars	Rs
To Balance b/d	60,000	By Cash A/c (received)	1,30,000
To Bills receivable A/c (dishonoured)	1,200	By Discount allowed A/c	5,500
To Sales A/c (credit)	1,44,000	By Bad debts A/c	3,500
(balancing figure)		By Bills receivable A/c	11,200
		(bills received) By Balance c/d	55,000
	2,05,200		2,05,200

Dr.                       Bills payable account                           Cr

Particulars	Rs	Particulars	Rs
To Cash A/c (bills paid)	7,000	By Balance b/d	2,000
To Balance c/d	3,000	By Sundry creditors A/c (bills accepted – balancing figure)
			8,000
	10,000		10,000

Dr.                      Total creditors account                        Cr.

Particulars	Rs	Particulars	Rs
To Cash A/c (paid )	70,000	By Balance b/d	25,000
To Discount received A/c	3,500	By Purchases A/c (credit)	84,500
To Bills payable A/c (bills accepted)	8,000	(balancing figure)
To balance c/d	28,000
	1,09,500		1,09,500

Trend analysis for Kavitha Ltd.

Particular	Rs. in thousands			Trends percentage
	2015-16	2016-17	2017-18	2015-16	2016-17	2017-18
Revenue from operations	100	125	150	100	125	150
Add: Other income	20	25	30	100	125	150
Total revenue	120	150	180	100	125	150
Less: Expenses	100	120	80	100	120	80
Project before tax	20	30	100	100	150	500
Less Income tax (30%)	6	9	30	100	150	500
Profit after tax	14	21	70	100	150	500

Note: 2016 -17
Percentage for Revenue from operations = \(\frac{125}{100}\) x 100 = 125%
Percentage of other income = \(\frac{25}{20}\) x 100 = 125%
Percentage of total revenue = \(\frac{150}{120}\) x 100 = 125%
Percentage for expenses = \(\frac{120}{100}\) x 100 = 120%
Percentage for before tax = \(\frac{30}{20}\) x 100 = 150%
Percentage for profit before tax = \(\frac{21}{14}\) x 100 = 150%
In 2017 - 18
Percentage for revenue from operations = \(\frac{150}{100}\) x 100 = 150%
Percentage for other income = \(\frac{25}{20}\) x 100 = 125%
Percentage of total revenue \(\frac{180}{120}\) x 100 = 150%
Percentage for expenses = \(\frac{80}{100}\) x 100 = 80% 
Percentage for profit before tax = \(\frac{100}{20}\) x 100 = 500%
Percentage for profit after tax = \(\frac{70}{14}\) x 100 = 500%

Operating cost ratio = \(\cfrac { Operating\ cost }{ Revenue\ from\ operations } \times 100=\cfrac { 4,80,000 }{ 8,00,000 } \times 100=60\)%
Cost of revenue from operations = Purchases of stock-in-trade + Change in inventories of stock in trade + Direct expenses (wages)
= 4,50,000 + (40,000) + 10,000 = Rs.4,20,000
Operating expenses = Administrative expenses + Selling and distribution expenses+ Employee benefits expenses (salaries)
= 20,000 + 28,000 + 12,000 = Rs.60,000
Operating cost = Cost of revenue from operations + Operating expenses
= 4,20,000 + 60,000 = Rs.4,80,000
Tutorial Note
Loss on sale of fixed assets is a non-operating item, hence it is ignored.
(iii) Operating profit ratio
Operating profit ratio gives the proportion of operating profit to revenue from operations.
Operating profit ratio is an indicator of operational efficiency of an organisation. It may be computed as follows
Operating profit ratio = \(\cfrac { Operating\ profit }{ Revenue\ from\ operations } \times 100\)
Alternatively, it is calculated as under.
Operating profit ratio = 100 – Operating cost ratio
Operating profit = Revenue from operations – Operating cost
A higher ratio indicates better profitability. Greater the operating ratio, higher is the margin available for paying non-operating expenses
Tutorial note
Operating cost ratio + Operating profit ratio = 100%

\(Gross\ profit\ ratio=\cfrac { Gross\ profit }{ Revenue\ from\ operators } \times 100\)
= \(\cfrac { 20,000 }{ 1,00,000 } \times 100=20\)%
Gross profit = Revenue from operations – Cost of revenue from operations
= 1,00,000 – 80,000 = Rs.20,000
(ii) Operating cost ratio
Operating cost ratio is the proportion of operating cost to revenue from operations.
This ratio is a test of the operational efficiency of the business. It is calculated as under.
\(Operating\ cost\ ratio=\cfrac { Operating\ cost }{ Revenue\ from\ operations } \times 100\)
Operating cost is the cost which is associated with the operating activities of the business.
Operating cost = Cost of revenue from operations + Operating expenses
Operating expenses = Employee benefit expenses + Depreciation + Other expenses related to office and administration, selling and distribution
A lower operating ratio indicates better profitability. Lesser the operating cost ratio, higher is
the margin available for payment of non operating expenses such as interest on loans, loss on sale of fixed assets, etc

Gross profit ratio = \(\frac { Gross\ profit }{ Revenue\ from\ operations } \) \(\times\) 100
Gross profit = Revenue from operations - Cost of revenue from operations
= Rs.2,50,000 - Rs.2,10,000
= Rs.40,000
∴ Gross profit ratio = \(\frac { 40,000 }{ 2,50,000 } \) \(\times\) 100 = 16%

Comparative income statement of Daniel Ltd for the year ended 2016 and 2017

Particulars	2015-16 Rs.	2016-17 Rs.	Absolute amount of increase (+) or decrease (-) Rs.	Percentage increase (+) or decrease (-)
Revenue from Operations	40,000	50,000	+ 10,000	+ 25
Less: Operating expenses	25,000	27,500	+ 2,500	+ 10
Profit before tax	15,000	22,500	+ 7,500	+ 50
Less: Income tax	4,500	6750	+ 2,250	+ 50
Profit after tax	10,500	15,750	+ 5,250	+ 50

Note:
Percentage increase for revenue from operations = \(\frac{10,000}{40,000}\) x 100 = 25%
Percentage increase for operating expenses = \(\frac{2,500}{25,000}\) x 100 = 10%
Percentage increase for profit before tax = \(\frac{7,500}{15,000}\) x 100 = 50%
Percentage increase for income for Income tax = \(\frac{2250}{4500}\) x 100 = 50%
Percentage increase for profit after tax = \(\frac{5250}{10,500}\) x 100 = 50%