Debtors Turnover Ratio=4times
Stock Turnover Ratio= 8times
Current ratio= 3:1
Average Debtors= 1,80,000
Working Capital Turnover Ratio= 8times
Cash sales 25% of total sales
Gross Profit Ratio= 33.33%
Closing Stock Rs 10,000 in excess of opening stock
Based on the above information, Calculate
- Sales
- Cost of Goods Sold
- Closing Stock
Working Notes
1. Debtor Turnover Ratio (D.T.R.) = Net Credit Sales / Average Debtors
D.T.R. = 4 times and Average Debtors = Rs 1,80,000 (given)
4 = Credit sales / 1,80,000
therefore, Credit sales = 1,80,000×4
= Rs. 7,20,000 ---- (i)
2. Calculation of Sales
Total Sales = Credit Sales + Cash Sales
Cash sales = 25% of total sales (given)
Total sales = 7,20,000 + 25% of total sales (from i )
75% of total sales = 7,20,000
therefore, total sales= 7,20,000 / 75%
= Rs. 9,60,000 -----(ii)
3. Gross Profit Ratio (G.P.R.) = Gross Profit / Sales × 100
G.P.R = 33.33% (given)
33.33% = Gross profit / 9,60,000 (sales = Rs 9,60,000 , from (ii) )
therefore, Gross Profit = Rs. 3,20,000 (approx.)
4. CALCULATION OF COST OF GOODS SOLD :
Cost of Goods Sold = Sales - Gross Profit
COGS = 9,60,000 - 3,20,000
= Rs. 6,40,000
5. Stock Turnover Ratio (S.T.R.) = Cost of Goods Sold / Average Stock
S.T.R = 8 times and COGS = Rs 6,40,000
8 = 6,40,000 / Average Stock
therefore, Average Stock = Rs. 80,000
Calculation of Closing Stock
Average Stock = (Opening Stock+Closing Stock) / 2
Let the Opening Stock be Rs. X
therefore, Closing Stock will be 10,000+X ( closing stock is 10,000 more than opening stock)
80,000 = ( X + 10,000 + X) / 2
1,60,000 = 2X + 10,000
1,50,000 = 2X
therefore, X = Rs 75,000
So, Opening stock = Rs. 75,000
Closing stock = 75,000 + 10,000
= Rs. 85,000
Thus,
Sales = Rs 9,60,000
Cost of Goods Sold = Rs 6,40,000
Closing Stock = Rs 85,000