Can anyone try to solve my problem becoz it had try many times and i am getting it wrong.So please
(i) Trade debtor at the end of the year 90,000
(ii)Trade creditor in beginning of year 25,000
(iii)Trade creditor at the end of the year 45,000
(iv)Net working capital 1,20,000
(v)Stock turnover ratio 5.0 times
(vi)Sales for the year 2007 5,00,000
(vii)Gross profit ratio 20% on the sales
Calculate (a) Purchase (b)Avg collection period
Purchase may be Rs.4,00,000/-
Because GP is 20% on sales.
So, Cost ???
Profit 20 (as 20% on sales)
Sales 100
Cost is 80 % of Sales. Purchase can be Rs.4,00,000/-
Stock turnover ratio is 5 , so Closing stock will be Rs.1,00,000/-
I thing so kamlesh bro is correct
as there is no information about opening stock and closing stock only stock turnover is given so we have to assume that
opening stock = closing stock
cogs=opening+purchases-closing
as opening = closing
cogs = purchases
i.e. 80% of sale = 400000
yr 2nd Q is about collection period
no information about cash sale and credit sales
. ' . we have to assume that all sales on credit basis
method 1: comman sence
Lets see total sale is 500000 =====> for 12 month
debtor is 90000 ======>for ? months
. ' . collection period = 12 * 90000 / 500000 =2.16 months
method 2 : formula based
debtor turnover = 500000 / 90000 =5.555....
. ' . collection period = 1 * 12 / 5.555 = 2.16 months
Ya, second solution is also right as there is absence of information regarding cash and credit sales.
@ Dimple Thacker
nice yaar I missed out that working capital but you grab it out nicely thanks bro
| Originally posted by : know your self | ||
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@ Dimple Thacker nice yaar I missed out that working capital but you grab it out nicely thanks bro |
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I also missed that working capital point.
CAclubindia
