Calculate Current Assets when,
Inventory Turnover Ratio - 4 times
Closing inventory is ₹20,000 more than opening inventory
Revenue from operations is ₹3,00,000,
Gross Profit Ratio 20% of revenue from operations.
Current Liabilities ₹40,000
Quick Ratio 0.75 : 1
Answer & explanation
Correct answer: option 2
The correct answer is Option (2) → ₹1,00,000
Current assets = quick (liquid) assets + inventory. The quick assets come from the quick ratio; the closing inventory comes from the inventory turnover ratio.
Cost of revenue from operations:
= ₹3,00,000 − 20% of ₹3,00,000
= ₹2,40,000
Average inventory = ₹2,40,000 ÷ 4 = ₹60,000
(Opening + Closing) ÷ 2 = ₹60,000, with Closing = Opening + ₹20,000
Opening inventory = ₹50,000; Closing inventory = ₹70,000
Quick assets = 0.75 × ₹40,000 = ₹30,000
Current assets = ₹30,000 + ₹70,000 = ₹1,00,000
NCERT (2026-27 edition):
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