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Question
Calculate the amount of opening trade receivables and closing trade receivables from the following information:
Trade receivables turnover ratio 8 times
Cost of revenue from operations ₹ 4,80,000
The amount of credit revenue from operations is ₹ 2,00,000 more than cash revenue from operations. Gross profit ratio is 20%. Opening trade receivables are 1/4th of Closing trade receivables.
Solution
|
Trade Receivables Turnover Ratio |
= |
Net Credit Sales/Average Receivables |
|
Cost of Revenue from Operations |
= |
₹ 4,80,000 |
|
Let Net Sales be |
= |
x |
|
Gross Profit ratio |
= |
Gross Profit/Net Sales × 100 |
|
20/100 |
= |
x − 4,80,000/x |
|
20x/100 |
= |
x – 4,80,000 |
|
x |
= |
6,00,000 |
|
Net Sales of the firm is |
= |
₹6,00,000 |
|
Let the cash revenue from operations |
= |
y |
|
Credit revenue from operations |
= |
y + 2,00,000 |
|
Total Sales of the firm |
= |
Cash Sales + credit sales |
|
6,00,000 |
= |
(y + y + 2,00,000) |
|
y |
= |
2,00,000 |
|
Cash Sales of the firm |
= |
₹2,00,000 |
|
Net Credit Sales |
= |
₹(2,00,000 + 2,00,000) = ₹4,00,000 |
|
Average Receivables |
= |
₹(4,00,000/8) |
|
= |
₹50,000 |
|
|
Let closing trade receivables be |
= |
z |
|
Opening trade receivables |
= |
z/4 |
|
Average trade Receivable |
= |
(Opening Trade Receivables + Closing trade Receivables)/2 |
|
50,000 |
= |
(z + z/4)/2 |
|
z |
= |
80,000 |
Therefore, Opening Trade Receivables and Closing Trade Receivables of the firm are ₹20,000 and ₹80,000 respectively.
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Gross Profit Ratio of a company is 25%. State giving reason, which of the following transactions will (a) increase or (b) decrease or (c) not alter the Gross Profit Ratio.
(i) Purchases of Stock-in-Trade ₹50,000.
(ii) Purchases Return ₹15,000.
(iii) Cash Sale of Stock-in-Trade ₹40,000.
(iv) Stock-in-Trade costing ₹20,000 withdrawn for personal use.
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Net Profit before Interest and Tax ₹6,00,000; Net Fixed Assets ₹20,00,000; Net Working Capital ₹10,00,000; Current Assets ₹11,00,000. Calculate Return on Investment.
Following is the Balance Sheet of the Bharati Ltd. as at 31st March, 2019:
|
Particulars |
Note No. |
Amount (₹) |
|
| I. EQUITY AND LIABILITIES
1. Shareholder's Funds |
|||
|
(a) Share Capital |
7,50,000 |
||
|
(b) Reserves and Surplus: |
|||
|
Surplus, i.e., Balance in Statement of Profit and Loss: |
|||
|
Opening Balance |
6,30,000 |
20,88,000 |
|
|
Add: Transfer from Statement of Profit and Loss |
14,58,000 |
||
|
2. Non-Current Liabilities |
|||
|
15% Long-term Borrowings |
24,00,000 |
||
|
3. Current Liabilities |
12,00,000 |
||
|
Total |
64,38,000 |
||
| II. ASSETS | |||
|
1. Non-Current Assets |
|||
|
(a) Fixed Assets |
27,00,000 |
||
|
(b) Non-Current Investments: |
|||
|
(i) 10% Investments |
3,00,000 |
||
|
(ii) 10% Non-trade Investments |
1,80,000 |
||
| 2. Current Assets |
32,58,000 |
||
|
Total |
64,38,000 |
||
You are required to calculate Return on Investment for the year 2018-19 with reference to Opening Capital Employed.
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(ii) Working Capital Turnover Ratio:
(iii) Debt to Equity Ratio; and
(iv) Proprietary Ratio.
| ₹ | ₹ | |||
| Revenue from Operations (Net Sales) | 5,00,000 | Current Liabilities | 1,40,000 | |
| Cost of Revenue from Operations (Cost of Goods Sold) | 3,00,000 | Paid-up Share Capital | 2,50,000 | |
| Current Assets | 2,00,000 | 13% Debentures | 1,00,000 |
On the basis of the following information calculate:
(ii) Working Capital Turnover Ratio.
| Information: | ₹ | ₹ | |||
| Revenue from Operations: | (a) Cash Sales | 40,00,000 | Paid-up Share Capital | 17,00,000 | |
| (b) Credit Sales | 20,00,000 | 6% Debentures | 3,00,000 | ||
| Cost of Goods Sold | 35,00,000 | 9% Loan from Bank | 7,00,000 | ||
| Other Current Assets | 8,00,000 | Debentures Redemption Reserve | 3,00,000 | ||
| Current Liabilities | 4,00,000 | Closing Inventory | 1,00,000 |
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