# A Company Had a Liquid Ratio of 1.5:1 and a Current Ratio of 2:1. Its Inventory Turnover Ratio Was 6 Times. It Had Total Current Assets of 2,00,000. Find Out Revenue from Operations If the Goods - Accountancy

Ledger

A company had a liquid ratio of 1.5: 1 and a current ratio of 2: 1. Its inventory turnover ratio was 6 times. It had total current assets of 2,00,000.
Find out revenue from operations if the goods are sold at a 25% profit on cost.

#### Solution

 Current Assets = ₹ 2,00,000 Current Ratio of the firm = Current Assets/Current Liabilities 2 = 2,00,000/Current Liabilities Current Liabilities = ₹1,00,000 Quick Ratio = Quick Assets/Current Liabilities 1.5 = Quick Assets/1,00,000 Quick Assets = ₹ 1,50,000 We know that, Quick Assets = Current Assets – Stock Using the above formula, Stock = Current Assets – Quick Assets = ₹(2,00,000 – 1,50,000) = ₹ 50,000 Assuming stock to be average stock Inventory Turnover Ratio = Cost of goods sold/Average Stock 6 = Cost of Goods sold/50,000 Cost of Goods Sold = ₹ 3,00,000 Profit on Sale of Goods = ₹(3,00,000 × 25/100) = ₹ 75,000 Revenue from Operations = Cost of Goods Sold + Gross Profit = ₹ (3,00,000 + 75,000) = ₹ 3,75,000
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