Question

From the following particulars of NB Ltd., calculate its Cost of Revenue from Operations for the year 2023-24.

Particulars
Current Assets	₹ 6,80,000
Current Liabilities	₹ 3,40,000
Quick Ratio	1.5 : 1
Inventory Turnover Ratio	4 times

Answer 1

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

1.5 : 1 = `"Quick Assets"/(₹ 3,40,000)`

Quick Assets = ₹ 3,40,000 × 1.5

= ₹ 5,10,000

Inventory = Current Assets − Quick Assets

= ₹ 6,80,000 − ₹ 5,10,000

= ₹ 1,70,000

Inventory Turnover Ratio = `"Cost of revenue from Operations"/"Average Inventory"`

4 = `"Cost of revenue from Operations"/(₹ 1,70,000)`

Cost of revenue from Operations = ₹ 1,70,000 × 4

= ₹ 6,80,000