Page 299 - MA-12

Ratio Analysis 4.27
2.5x – x = ` 1,20,000
1.5x = ` 1,20,000

` 1,20,000
x = = ` 80,000 (Current Liabilities)
1.5
Current Assets = ` 80,000 × 2.5 = ` 2,00,000

Quick Assets = ` 80,000 × 1.5 = ` 1,20,000
Closing Inventories = Current Assets – Quick Assets
= ` 2,00,000 – ` 1,20,000 = ` 80,000

100
Revenue from Operation = ` 1,00,000 × = ` 4,00,000.
26
Cost of Revenue from Operations = ` 4,00,000 – ` 1,00,000 = ` 3,00,000

Cost of Revenue from Operations
Inventory Turnover Ratio =
Average Inventory*
` 3,00,000
3 = Opening Inventory + 80,000
`
2
3 (Opening Inventory + ` 80,000) = ` 6,00,000

( 6,00,000 -` ` 2,40,000)
Opening Inventory =
3
= ` 1,20,000 (Opening Inventory)

Opening Inventory + Closing Inventory
*Average Inventory = .
2
Illustration 18.
The ledger balances of Rashmi Ltd. as on 31st March, 2019 are as follows:

` `
Equity Share Capital 2,00,000 Fixed Assets (Net) 10,00,000
(20,000 Equity Shares of ` 10 each) Non-current Investments 4,00,000
10% Preference Share Capital 2,00,000 Long-term Loans and Advances 2,00,000
Debentures Redemption Reserve 1,60,000 Inventories 7,90,000
Surplus, i.e., Balance in Statement Current Investments 20,000
of Profit and Loss (Current Years) 2,40,000 Trade Receivables 8,00,000
12% Debentures 10,00,000 Cash and Bank Balances 10,000
Long-term Provisions 6,00,000 Prepaid Expenses 10,000
Trade Payables 2,00,000 Short-term Loans and Advances 10,000
Short-term Bank Loan 80,000 Provision for Doubtful Debts 40,000
Provision for Tax 2,40,000 Other Current Liabilities 2,80,000