Following information is given to you -I Inventory Turmover Ratio 5 TimesII Inventory at the end is Rs- 5-000 more than the inventory in the beginning-III Revenue from Operations all credit Rs- 2-00-000IV Gross Profit Ratio 1-4 on cost-V Current Liabilities Rs- 60-000 -VI Quick Ratio 0-75 - Calculate i Cost of Revenue from Operations- ii Opening Inventory Closing inventory- and iii Quick Assets and Current Assets-

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Standard XII

Accountancy

Inventory Turnover Ratio

Following inf...

Question

Following information is given to you :
(I) Inventory Turmover Ratio 5 Times

(II) Inventory at the end is Rs. 5,000 more than the inventory in the beginning.

(III) Revenue from Operations (all credit) Rs. 2,00,000

(IV) Gross Profit Ratio $\frac{1}{4}$ on cost.

(V) Current Liabilities Rs. 60,000.

(VI) Quick Ratio 0.75.

Calculate (i) Cost of Revenue from Operations, (ii) Opening Inventory Closing inventory, and (iii) Quick Assets and Current Assets.

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Solution

Gross Profit is $\frac{1}{4}$ th of cost. Therefore, goods costing Rs. 100 is sold for Rs. 125.

If Revenue from Operations are 125, Cost is 100.

If Revenue from Operations are Rs. 2,00,000, Cost is $\frac{100}{125} \times 2, 00, 000 = R s . 1, 60, 000$

Average Inventory $= \frac{Cost of Revenue from Operations}{Inventory Turnover Ratio} = \frac{R s . 1, 60, 000}{5} = R s . 32, 000$

Opening Inventory = Rs. 32,000 - 1/2 of 5,000 = Rs. 29,500

Closing Inventory = Rs. 32,000 + 1/2 of 5,000 = Rs. 34,500

Current Liabilities are Rs. 60,000 and Quick Ratio is .75, therefore

Quick Assets = Rs 60,000 times .75 = Rs. 45,000

Current Assets = Quick Assets + Closing Inventory

= 45,000 + Rs. 34,500 = Rs. 79,500

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Similar questions

From the given information, calculate the following:

(i) Cost of revenue from operations.

(ii) Opening and closing inventory.

(iii) Quick assets.

(iv) Current assets.

Information :

Inventory turnover ratio 6 times, inventory at the end is Rs 6,000 more than the inventory in the beginning, revenue from operation (all credits) Rs 2,40,000 ,Gross profit 25 $%$ on cost, current liabilities Rs 80,000, quick ratio 0.80 : 1.

From the following information, calculate Operating Ratio and Quick Ratio.

Revenue from operations Rs 3,00,000; Opening Inventory Rs 10,000; Purchases Rs 1,20,000; Wages Rs 30,000 ; Closing Inventory Rs 30,000; Selling and Distribution Expenses Rs 10,000; Currnet Assets Rs 2,00,000 and Current Liabilities Rs 1,20,000.

Opening Inventory Rs. 29,000; Closing Inventory Rs. 31,000; Revenue from Operations (Sales) Rs. 3,20,000; Gross Profit Ratio 25% on Revenue from Operations.
Calculate:
(i) Inventory Turnover Ratio and
(ii) Average Age of Inventory.

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:

	Rs
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

	Rs
Current Assets	35,000
Current Liabilities	17,500
Inventory	15,000
Operating Expenses	20,000
Revenue from Operations	60,000
Cost of Goods Sold	30,000

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