Question 138 Chapter 4 of +2-B
Table of Contents
Miscellaneous
138. From the following information, calculate Inventory Turnover Ratio;
Operating Ratio and Working Capital Turnover Ratio:
Opening Inventory 28,000; Closing Inventory 22,000; Purchases 46,000;
Revenue from Operations, i.e., Net Sales 80,000; Return 10,000; Carriage
Inwards 4,000; Office Expenses 4,000; Selling and Distribution Expenses
2,000; Working Capital 40,000.
The solution of Question 138 Chapter 4 of +2-B: –
| Cost of Goods Sold | = | Opening Inventory + Purchases + Carriage Inwards − Closing Inventory |
| = | Rs 28,000 + Rs 46,000 + Rs 4,000 – Rs 22,000 | |
| = | Rs. 56,000 |
| Average Inventory | = | Opening Inventory + Closing Inventory |
| 2 |
| Current Ratio | = | Rs. 28,000 + Rs 22,000 |
| 2 | ||
| = | Rs 25,000 |
| Inventory Turnover Ratio | = | Cost of Goods Sold |
| Average Inventory |
| = | Rs. 56,000 | |
| Rs. 25,000 | ||
| = | 2.24 Times |
| Operating Expenses | = | Office Expenses + Selling and Distribution Expenses |
| = | Rs 4,000 − Rs 2,000 | |
| = | Rs 6,000 | |
| Operating Cost | = | Cost of Goods Sold + Operating Expenses |
| = | Rs 56,000 + Rs 62,000 | |
| = | Rs 62,000 |
| Operating Ratio | = | Operating Cost | X | 100 |
| Net Sales |
| Operating Ratio | = | Rs 62,000 | X | 100 |
| Rs 80,000 | ||||
| = | 77.5% |
| Working Capital | = | Rs 40,000 |
| Net Sales | = | Rs 80,000 |
| Working Capital Turnover Ratio | = | Net Sales |
| Working Capital |
| = | Rs 80,000 | |
| Rs 40,000 | ||
| = | 2 Times |
Balance Sheet: Meaning, Format & Examples
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Also, Check out the solved question of previous Chapters: –
T.S. Grewal’s Double Entry Book Keeping +2 (Vol. I: Accounting for Not-for-Profit Organizations and Partnership Firms)
- Chapter No. 1 – Financial Statement of Not-For-Profit Organisations
- Chapter No. 2 – Accounting for Partnership Firms – Fundamentals
- Chapter No. 3 – Goodwill: Nature and Valuation
- Chapter No. 4 – Change in Profit-Sharing Ratio Among the Existing Partners
- Chapter No. 5 – Admission of a Partner
- Chapter No. 6 – Retirement/Death of a Partner
- Chapter No. 7 – Dissolution of a Partnership Firm
T.S. Grewal’s Double Entry Book Keeping (Vol. II: Accounting for Companies)
- Chapter No. 8 – Company Accounts – Accounting for Share Capital
- Chapter No. 9 – Company Accounts – Issue of Debentures
- Chapter No. 10 – Redemption of Debentures
T.S. Grewal’s Double Entry Book Keeping (Vol. II: Accounting for Companies)
- Chapter No. 1 – Financial Statements of a Company
- Chapter No. 2 – Financial Statement Analysis
- Chapter No. 3 – Tools of Financial Statement Analysis – Comparative Statements and Common- Size Statements
- Chapter No. 4 – Accounting Ratios
- Chapter No. 5 – Cash Flow Statement
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