Calculate Revenue from operations of BN Ltd. From the following information :
Current assets Rs. 8,00,000.
Quick ratio is 1.5 : 1
Current ratio is 2 : 1.
Inventory turnover ratio is 6 times.
Goods were sold at a profit of 25% on cost.

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Solution

Gross Profit = Revenue from Operations - Cost of Goods Sold

Current Assets = Rs. 8,00,000
Current Ratio = Current Assets/Current Liabilities
2/1 = 8,00,000/Current Liabilities
Current Liabilities = 8,00,000/2
= Rs. 4,00,000

Quick Ratio = Quick Assets/Current Liabilities
1.5/1 = Quick Assets/4,00,000
Quick Assets = 4,00,000 * 1.5
= Rs. 6,00,000

Stock = Current Assets - Quick Assets
= 8,00,000 - 6,00,000
= Rs. 2,00,000

Inventory Turnover Ratio = Cost of Goods Sold/Average Stock
6 = Cost of Goods Sold/2,00,000
Cost of Goods Sold = 6 * 2,00,000
= Rs. 12,00,000

Gross Profit = 12,00,000 * 25/100
= Rs. 3,00,000

Revenue from Operations = Cost of Goods Sold + Gross Profit
= 12,00,000 + 3,00,000
= Rs. 15,00,000.

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From the following information calculate:

(i) Gross Profit Ratio (ii) Inventory Turnover Ratio (iii) Current Ratio (iv) Liquid Ratio (v) Net Profit Ratio (vi) Working capital Ratio:

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Revenue from Operations	25,20,000
Net Profit	3,60,000
Cast of Revenue from Operations	19,20,000
Long-term Debts	9,00,000
Trade Payables	2,00,000
Average Inventory	8,00,000
Current Assets	7,60,000
Fixed Assets	14,40,000
Current Liabilities	6,00,000
Net Profit before Interest and Tax	8,00,000

Calculate following ratios from the following information:

(i) Current ratio (ii) Acid test ratio (iii) Operating Ratio (iv) Gross Profit Ratio

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