Question

Determine the sales of a firm given the following
mation:
Current ratio = 1.4
Acid-test ratio = 1.2
Current liabilities = 1,600
Inventory turnover ratio = 8.​

Answer 1

Explanation:

Acid Test Ratio =Quick Assets/Current liability

1.2=Quick Assets/1600

Quick Assets =720

Current Ratio =Current Assets/Current liability

1.4=Current Assets/1600

Current Assets =2240

Closing Inventory = Current Assets- Quick Assets

=2240-720=1520

Inventory Turnover Ratio=Cost of Revenue from operations/ Average Inventory

Average Inventory = Opening Inventory +Closing Inventory/2

Average Inventory =0+1520/2=760.

8=Cost of Revenue from operations /760

Cost of Revenue from operations =760×8=6080.

Revenue from operations = Cost of Revenue from operations +Gross Profit =6080Ans.