# Calculate Revenue from Operations of Bn Ltd. from the Following Information: - Accountancy

Sum

Calculate Revenue from operations of BN Ltd. From the following information:

 Current assets ₹ 8,00,000. Quick ratio is 1.5: 1 Current ratio is 2: 1 Inventory turnover ratio is 6 times.

Goods were sold at a profit of 25% on cost.

#### Solution

Gross Profit = Revenue from Operations – Cost of Goods Sold
Current Assets =  8,00,000

Current Ratio  = "Current Assets"/"Current Liabilties"

2/1 = (8,00,000)/ "Current Liabilities"

Current Liabilities =  (8,00,000)/2 =  ₹ 4,00,000

Quick Ratio = "Quick Assets"/"Current Liabilities"

1.5/1 = "Quick Assets"/(4,00,000)

Quick Assets = ₹ 6,00,000

Stock = Current Assets – Quick Assets = ₹ (8,00,000 – 6,00,000) = ₹ 2,00,000

Inventory turnover Ratio = "Cost of Goods Sold"/"Average Stock"

6 = "Cost of Goods Sold"/(2,00,000)

Cost of Goods Sold = 6 × 2,00,000 = ₹ 12,00,000

Gross Profit = 12,00,000 × 25/100 = ₹ 3,00,000

Revenue from Operations = Cost of Goods Sold + Gross Profit
= ₹ ( 12,00,000 + 3,00,000)
= ₹ 15,00,000

Concept: Activity Ratios - Inventory Turnover Ratio
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