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Question
Calculate the Working Capital Turnover Ratio of Moonlight Ltd., (up-to two decimal places) from the following particulars.
| Particulars | |
| Cash | ₹ 10,00,000 |
| Short-term Loans and Advances | ₹ 3,00,000 |
| Inventory | ₹ 2,00,000 |
| Trade Payables | ₹ 5,00,000 |
| Cost of Revenue from operations | ₹ 12,00,000 |
| Gross Profit on Cost of Revenue from Operations | 25% |
Solution
Working Capital Turnover Ratio =
Capital of Revenue from Operations:
Cost of Revenue from Operations = 12,00,000
Gross profit = 25%
Revenue from Operations = ₹ 12,00,000 + (25% of 12,00,000)
= 12,00,000 + 3,00,000
Revenue from Operations = ₹ 15,00,000
Calculation of Working Capital:
Current Assets = Cash + Short-term Loans and Advances + Inventory
= 10,00,000 + 3,00,000 + 2,00,000 = ₹ 15,00,000
Current Liabilities = Trade payables
= ₹ 5,00,000
Working Capital = 15,00,000 − 5,00,000 = ₹ 10,00,000
Working Capital Turnover Ratio =
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