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

  1. Sales
  2. Cost of Goods Sold
  3. 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

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