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Question
From the following information, determine Opening and Closing inventories:
Inventory Turnover Ratio 5 Times, Total sales ₹ 2,00,000, Gross Profit Ratio 25%. Closing Inventory is more by ₹ 4,000 than the Opening Inventory.
Solution
Sales = 2,00,000
Gross Profit = 25% on Sales
∴ Gross Profit =`200000 xx 25/100 = 50000`
Cost of Goods Sold = Total Sales − Gross Profit
= 2,00,000 − 50,000 = 1,50,000
Inventory Turnover Ratio=`"Cost of goods Sold"/"Average Inventory"`
`5 = 150000/"Average Inventory"`
Average Inventory = 30000
Let Opening Inventory = x
Closing Inventory = x + 4,000
Average Inventory
= `("Opening Inventory + Closing Inventory")/2`
`30000 = (x + x + 4000)/2`
or, 60000 = 2x + 4000
or, x = 28000
Opening Inventory = x = Rs 28,000
Closing Inventory = x + 4,000 = 28,000 + 4,000 = Rs 32,000
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Compute Gross Profit Ratio, Working Capital Turnover Ratio, Debt Equity Ratio and Proprietary Ratio from the following information:
|
|
Rs |
|
Paid-up Share Capital |
5,00,000 |
|
Current Assets |
4,00,000 |
|
Revenue from Operations |
10,00,000 |
|
13% Debentures |
2,00,000 |
|
Current Liabilities |
2,80,000 |
|
Cost of Revenue from Operations |
6,00,000 |
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| Rs. | |
| Gross Profit | 50,000 |
| Revenue from Operations | 100,000 |
| Inventory | 15,000 |
| Trade Receivables | 27,500 |
| Cash and Cash Equivalents | 17,500 |
| Current Liabilities | 40,000 |
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| Plant & Machinery | 30,000 |
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| Particulars | Note No. | Rs. |
| I. Equity and Liabilities: | ||
| 1. Shareholders’ funds | ||
| a) Share capital | 10,00,000 | |
| b) Reserves and surplus | 9,00,000 | |
| 2. Non-current Liabilities | ||
| Long-term borrowings | 12,00,000 | |
| 3. Current Liabilities | ||
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| Total | 36,00,000 | |
| II. Assets | ||
| 1. Non-current Assets | ||
| a) Fixed assets | ||
| Tangible assets | 18,00,000 | |
| 2. Current Assets | ||
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| c) Cash and cash equivalents | 5,00,000 | |
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|
Particulars |
₹ | Particulars |
₹ |
|||
|
Current Assets |
2,00,000 | Trade Receivables |
1,10,000 |
|||
|
Inventories |
50,000 | Current Liabilities |
70,000 |
|||
|
Prepaid Expenses |
10,000 |
|
||||
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| ₹ | ₹ | |||
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