Page 328 - MA-12

Model Test Papers M.19

(b)
Change Reason
(i) No Change Both purchases and closing inventory will increase by the same amount hence, Cost of Revenue
from Operations will remain unchanged.
(ii) No Change Revenue from Operations will increase but closing inventory will decrease by the same percentage
(not by same amount). As a result, Cost of Revenue from Operations will increase by the same
percentage as the Revenue from Operations increase.

(c)

Cost of Revenue from Operations
+ Operating Expenses
(i) Operating Ratio = ¥ 100
Revenue from Operations
` 13,20,000 + ` 2,20,000
= ¥ 100 = 70%.
` 22,00,000
Notes: Revenue from Operations = Cash Revenue from Operations

+ Credit Revenue from Operations
= ` 10,00,000 + ` 12,00,000 = ` 22,00,000
Gross Profit = 40% of ` 22,00,000 = ` 8,80,000
Cost of Revenue from Operations = Revenue from Operations – Gross Profit
= ` 22,00,000 – ` 8,80,000 = ` 13,20,000

Operating Expenses = 10% of ` 22,00,000 = ` 2,20,000.

Cost of Revenue from Operations
(ii) Inventory Turnover Ratio =
Average Inventory
` 13,20,000
Inventory Turnover Ratio = ` 1,50,000 (Opening) + ` 1,70,000 (Closing)

2
= 8.25 Times.

Shareholders’ Funds
(iii) Proprietary Ratio = ¥ 100
Total Assets
` 6,00,000 (Share Capital)
= ` 8,00,000 ¥ 100 = 75% .

Note: Total Assets = Current Assets + Non-Current Assets (Fixed Assets)
= ` 3,00,000 + ` 5,00,000 = ` 8,00,000.