Page 54 - AAAXII

M.50 An Aid to Accountancy—CBSE XII

Or
Current Ratio = 2.5;
Quick Ratio = 1.5;
Working Capital = ` 1,20,000 (Given)
Let the Current Liabilities = x
Current Assets will be = 2.5x
Current Assets – Current Liabilities = Working Capital
2.5x – x = ` 1,20,000
1.5x = ` 1,20,000

` 1,20,000
x = = ` 80,000 (C.L.)
1.5
Current Assets (C.A.) = ` 80,000 × 2.5 = ` 2,00,000
Quick Assets
Quick Ratio =
Current Liabilities
Quick Assets
1.5 =
` 80,000
Quick Assets = ` 80,000 × 1.5 = ` 1,20,000
Closing Inventory (Closing Stock) = Current Assets – Quick Assets
= ` 2,00,000 – ` 1,20,000 = ` 80,000
Let the Revenue from Operations be = ` 100
Gross Profit will be = 25% of ` 100 = ` 25
Cost of Revenue from Operations = Revenue from Operations – Gross Profit
= ` 100 – ` 25 = ` 75
If Gross Profit is ` 25, then Cost of Revenue from Operations = ` 75
If Gross Profit is ` 1,00,000,

` 75
Cost of Revenue from Operations = ¥ ` 1,00,000 = ` 3,00,000
` 25
Cost of Revenue from Operations
Inventory Turnover Ratio =
Average Inventory
` 3,00,000
3 =
Average Inventory
` 3,00,000
Average Inventory = = ` 1,00,000
3
Opening Inventory + Closing Inventory
` 1,00,000 =
2
Opening Inventory + ` 80,000
` 1,00,000 =
2
Opening Inventory = ` 2,00,000 – ` 80,000 = ` 1,20,000.