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Q9. Current ratio- 2,Quick ratio- 1.5,Working capital- rs.3,00,000 Closing stock is 3times more than the opening stock, Average age of inventory 73 days, Gross profit is 10% of revenue from operations, Cash revenue from operations is ¼ of credit revenue from operations, Average debtors-Rs.50000.Find Cl. stock, cost of revenue from operations and debtors velocity.
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Q9. Current ratio- 2,Quick ratio- 1.5,Working capital- rs.3,00,000 Clo...
Calculation of Closing Stock, Cost of Revenue from Operations, and Debtors Velocity


Current Ratio and Quick Ratio


  • Current Ratio = Current Assets / Current Liabilities = 2

  • Quick Ratio = (Current Assets - Inventory) / Current Liabilities = 1.5



Working Capital


  • Working Capital = Current Assets - Current Liabilities = Rs.3,00,000



Inventory


  • Closing Stock = 3 * Opening Stock

  • Average Age of Inventory = 73 days



Gross Profit and Revenue from Operations


  • Gross Profit = 10% of Revenue from Operations

  • Cash Revenue from Operations = 1/4 of Credit Revenue from Operations

  • Cost of Revenue from Operations = Revenue from Operations - Gross Profit



Debtors Velocity


  • Average Debtors = Rs.50,000

  • Debtors Velocity = 365 days / (Credit Revenue from Operations / Average Debtors)



Explanation

The current ratio and quick ratio indicate the company's ability to pay off its current liabilities with its current assets. The current ratio of 2 indicates that the company has twice the amount of current assets as current liabilities. The quick ratio of 1.5 indicates that the company has enough quick assets (current assets - inventory) to pay off its current liabilities.


The working capital of Rs.3,00,000 indicates that the company has enough current assets to cover its current liabilities and still have some left over.


The closing stock can be calculated as 3 times the opening stock. The average age of inventory of 73 days indicates that the company holds its inventory for an average of 73 days before selling it.


The gross profit of 10% of revenue from operations indicates that for every Rs.1 of revenue from operations, the company earns a gross profit of 0.1 Rs. The cost of revenue from operations can be calculated by subtracting the gross profit from the revenue from operations. The cash revenue from operations is 1/4 of the credit revenue from operations.


The average debtors of Rs.50,000 indicate that the company has Rs.50,000 in outstanding credit sales. The debtors velocity indicates the number of times the company collects its average debtors in a year.
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Q9. Current ratio- 2,Quick ratio- 1.5,Working capital- rs.3,00,000 Clo...
closing stock -150000,cost of rev. from operation -18000
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Q9. Current ratio- 2,Quick ratio- 1.5,Working capital- rs.3,00,000 Closing stock is 3times more than the opening stock, Average age of inventory 73 days, Gross profit is 10% of revenue from operations, Cash revenue from operations is ¼ of credit revenue from operations, Average debtors-Rs.50000.Find Cl. stock, cost of revenue from operations and debtors velocity.
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