Calculate current assets of a company from the following information:
Inventory turnover ratio = 4 times
Inventory at the end is Rs. 20,000 more than the inventory in the beginning.
Revenue from Operations Rs. 3,00,000 and gross profit ratio is `20%` of revenue from operations.
Current liabilities = Rs. 40,000
Quick ratio = 0.75 : 1

Explanation

Cost of Revenue from Operations = Revenue from Operations – Gross Profit
= Rs. 3,00,000 – `(Rs. 3,00,000xx20%)`
= Rs. 3,00,000 – Rs. 60,000
= Rs. 2,40,000
Inventory Turnover Ratio = Cost of Revenue from Operations/ Average Inventory
Average Inventory = Cost of Revenue from Operations/4
= Rs. 2,40,000/4 = Rs. 60,000
Average Inventory = (Opening inventory + Closing inventory)/2
Rs. 60,000 = Opening inventory + (Opening inventory +Rs.20,000)/2
Rs. 60,000 = Opening inventory + Rs. 10,000
Opening Inventory = Rs. 50,000
Closing Inventory = Rs. 70,000
Liquid Ratio = Liquid assets/current liabilities
0.75 = Liquid assets/Rs. 40,000
Liquid Assets = Rs. `40,000xx0.75` = Rs. 30,000
Current Assets = Liquid assets + Closing inventory
= Rs. 30,000 + Rs. 70,000 = Rs. 1,00,000