Question

Trade receivables' velocity = 3 months
Inventory turnover ratio = 8
Fixed asset turnover ratio = 8
Gross profit ratio = 25%
Gross profit = ₹80,000
Calculate: (i) revenue from operations; (ii) trade receivables, (iii) Closing inventory and (iv) Fixed Assets.​

Answer 1

Cost of Goods Sold = Opening Stock + Purchases + Closing Stock

= 40,000 + 3,20,000 − 1,20,000 = 2,40,000

Average stock = opening stock + closing stock ÷ 2

= 40,000 + 1,20,000 = 80,000

2

stock turnover ratio = 2,40,000 = 3 times

80,000