From the following information, calculate opening and closing inventory:
Gross Profit Ratio - 25%
Revenue from operations - Rs 8,00,000
Inventory turnover ratio - 4 times
Opening inventory was 2 times of the closing inventory.
This outlines the calculation for opening and closing inventory:
1. Calculate Cost of Revenue (COGS):
- Gross Profit = Revenue from Operations * Gross Profit Ratio
- Gross Profit = Rs. 8,00,000 * 25% = Rs. 2,00,000
- Cost of Revenue (COGS) = Revenue from Operations - Gross Profit
- COGS = Rs. 8,00,000 - Rs. 2,00,000 = Rs. 6,00,000
2. Calculate Average Inventory:
- Inventory Turnover Ratio = Cost of Revenue / Average Inventory
- 4 = Rs. 6,00,000 / Average Inventory
- Average Inventory = Rs. 6,00,000 / 4 = Rs. 1,50,000
3. Establish Equations for Opening and Closing Inventory:
Let:
- Closing Inventory = X
- Opening Inventory = 2X (Given: Opening inventory is double the closing inventory)
Equation:
- Average Inventory = (Opening Inventory + Closing Inventory)/2
Substitution:
Rs. 1,50,000 = (2X + X)/2
Rs. 1,50,000 = 3X/2
3X = Rs. 1,50,000 * 2
X = Rs. 3,00,000 / 3
X = Rs. 1,00,000
4. Determine Opening and Closing Inventory:
- Closing Inventory (X) = Rs. 1,00,000
- Opening Inventory (2X) = 2 * Rs. 1,00,000 = Rs. 2,00,000
Result:
- Opening Inventory: Rs. 2,00,000
- Closing Inventory: Rs. 1,00,000
The Quick Ratio of a company is $1:1$. Which of the following transactions will result in an increase in the Quick Ratio?
From the following information, calculate Opening Trade Receivables and Closing Trade Receivables :
Trade Receivables Turnover Ratio - 4 times
Closing Trade Receivables were Rs 20,000 more than that in the beginning.
Cost of Revenue from operations - Rs 6,40,000.
Cash Revenue from operations \( \frac{1}{3} \)rd of Credit Revenue from operations
Gross Profit Ratio - 20%
| List-I | List-II |
| (A) Test of Activity | (I) Acid Test Ratio |
| (B) Test of Liquidity | (II) Debt Equity Ratio |
| (C) Test of Solvency | (III) Debtor Turnover Ratio |
| (D) Test of Profitability | (IV) Return on Investment Ratio |
| List-I | List-II |
| (A) Capital Reserve | (I) Cash and Cash Equivalent |
| (B) Call in advance | (II) Intangible Fixed Assets |
| (C) Licence and Franchise | (III) Other Current Liabilities |
| (D) Marketable Securities | (IV) Reserve and Surplus |