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Question
Calculate Trade Receivables Turnover Ratio from the following information:
| 31st March,2018 (₹) | 31st March,2019 (₹) | |
| Sundry Debtors | 28,000 | 25,000 |
| Bills Receivable | 7,000 | 15,000 |
| Provision for Doubtful Debts | 2,800 | 2,500 |
Total Sales ₹ 1,00,000; Sales Return ₹ 1,500; Cash Sales ₹ 23,500.
Solution
Net Credit Sales = Total Sales − Sales Return − Cash Sales
= 1,00,000 − 1,500 − 23,500 = 75,000
Average Receivable
= `("Opening Debtors + Opening Bills Receivable + Closing Debtors + Closing Bills Receivable")/2`
Average Receivable = `(28000 + 7000 + 25000 + 15000)/2` = Rs 37500
Trade Receivable Turnover Ratio = `"Net Credit Sales"/"Average Trade Receivables"`
Trade Receivables Turnover Ratio = `75000/37500` = 2 times
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RELATED QUESTIONS
From the following information, calculate the following ratios:
i) Quick Ratio
ii) Inventory Turnover Ratio
iii) Return on Investment
| Rs. | |
| Inventory in the beginning | 50,000 |
| Inventory at the end | 60,000 |
| Revenue from operations | 4,00,000 |
| Gross Profit | 1,94,000 |
| Cash and Cash Equivalents | 40,000 |
| Trade Receivables | 1,00,000 |
| Trade Payables | 1,90,000 |
| Other Current Liabilities | 70,000 |
| Share Capital | 2,00,000 |
| Reserves and Surplus | 1,40,000 |
(Balance in the Statement of Profit & Loss A/c)
Working Capital ₹ 3,60,000; Total :Debts ₹ 7,80,000; Long-term Debts ₹ 6,00,000; Inventories ₹ 1,80,000. Calcltate Liquid Ratio.
Current Assets of a company is are ₹ 5,00,000. Its Current Ratio is 2.5 : 1 and Quick Ratio is 1 : 1. Calculate value of Current Liabilities, Liquid Assets and Inventory.
When Debt to Equity Ratio is 2, state giving reason, whether this ratio will increase or decrease or will have no change in each of the following cases:
(i) Sale of Land (Book value ₹4,00,000) for ₹5,00,000; (ii) Issue of Equity Shares for the purchase of Plant and Machinery worth ₹10,00,000; (iii) Issue of Preference Shares for redemption of 13% Debentures, worth ₹10,00,000.
Calculate Total Assets to Debt Ratio from the following information:
| Particulars | ₹ |
Particulars |
₹
|
||
| Total Assets | 15,00,000 | Bills Payable | 60,000 | ||
| Total Debts | 12,00,000 | Bank Overdraft | 50,000 | ||
| Creditors | 90,000 |
Outstanding Expenses |
20,000 |
||
Calculate Proprietary Ratio from the following:
| Equity Shares Capital | ₹ 4,50,000 | 9% Debentures | ₹ 3,00,000 |
| 10% Preference Share Capital | ₹ 3,20,000 | Fixed Assets | ₹ 7,00,000 |
| Reserves and Surplus | ₹ 65,000 | Trade Investment | ₹ 2,45,000 |
| Creditors | ₹ 1,10,000 | Current Assets | ₹ 3,00,000 |
From the following information, calculate Proprietary Ratio:
|
Particulars |
Note No. |
Amount |
|
I. EQUITY AND LIABILITIES 1. Shareholders' Funds |
|
|
|
(a) Share Capital |
|
6,00,000 |
|
(b) Reserves and Surplus |
|
1,50,000 |
|
2. Current Liabilities |
|
|
|
(a) Trade Payables |
|
1,00,000 |
|
(b) Other Current Liabilities |
|
50,000 |
|
(c) Short-term Provisions (Provision for Tax) |
|
1,00,000 |
|
Total |
|
10,00,000 |
|
II. ASSETS |
|
|
|
1. Non-Current Assets |
|
|
|
Fixed Assets (Tangible Assets) |
|
5,00,000 |
|
2. Current Assets |
|
|
|
(a) Current Investments |
|
1,50,000 |
|
(b) Inventories |
|
1,00,000 |
|
(c) Trade Receivables |
|
1,50,000 |
|
(d) Cash and Cash Equivalents |
|
1,00,000 |
|
Total |
|
10,00,000 |
Calculate Inventory Turnover Ratio from the data given Below:
| Inventory in the beginning of the year | Rs 20000 |
| Inventory at the end of the year | Rs 10000 |
| Purchases | Rs 50,000 |
| Carriage Inwards | Rs 5000 |
| Revenue from Operations, i.e., Sales | Rs 100000 |
State the significance of this ratio.
From the following information, calculate Opening and Closing Trade Receivables, if Trade Receivables Turnover Ratio is 3 Times:
(i) Cash Revenue from Operations is 1/3rd of Credit Revenue from Operations.
(ii) Cost of Revenue from Operations is ₹3,00,000.
(iii) Gross Profit is 25% of the Revenue from Operations.
(iv) Trade Receivables at the end are 3 Times more than that of in the beginning.
Calculate Trade Payables Turnover Ratio for the year 2018-19 in each of the alternative cases:
Case 1 : Closing Trade Payables ₹ 45,000; Net Purchases ₹ 3,60,000; Purchases Return ₹ 60,000; Cash Purchases ₹ 90,000.
Case 2 : Opening Trade Payables ₹ 15,000; Closing Trade Payables ₹ 45,000; Net Purchases ₹ 3,60,000.
Case 3 : Closing Trade Payables ₹ 45,000; Net Purchases ₹ 3,60,000.
Case 4 : Closing Trade Payables (including ₹ 25,000 due to a supplier of machinery) ₹ 55,000; Net Credit Purchases ₹ 3,60,000.
Equity Share Capital ₹ 15,00,000; Gross Profit on Revenue from Operations, i.e., Net Sales `33 1/3`%; Cost Revenue from Operatins or Cost of Goods Sold ₹ 20,00,000; Current Assets ₹ 10,00,000; Current Liabilities ₹ 2,50,000. Calculate Working Capital Turnover Ratio
Cost of Revenue from Operations (Cost of Goods Sold) ₹3,00,000. Operating Expenses ₹1,20,000. Revenue from Operations: Cash Sales ₹5,20,000; Return ₹20,000. Calculate Operating Ratio.
(i) Cost of Revenue from Operations (Cost of Goods Sold) ₹2,20,000; Revenue from Operations (Net Sales) ₹3,20,000; Selling Expenses ₹12,000; Office Expenses ₹8,000; Depreciation ₹6,000. Calculate Operating Ratio.
(ii) Revenue from Operations, Cash Sales ₹4,00,000; Credit Sales ₹1,00,000; Gross Profit ₹1,00,000; Office and Selling Expenses ₹50,000. Calculate Operating Ratio.
Calculate Operating Ratio from the following information:
Operating Cost ₹ 6,80,000; Gross Profit 25%; Operating Expenses ₹ 80,000.
Net Profit before Interest and Tax ₹4,00,000; 15% Long-term Debt ₹8,00,000; Shareholders' Funds ₹4,00,000. Calculate Return on Investment.
From the following informations, calculate Return on Investment (or Return on Capital Employed):
|
Particulars |
₹ |
||
|
Share Capital |
5,00,000 |
||
| Reserves and Surplus | 2,50,000 | ||
| Net Fixed Assets | 22,50,000 | ||
| Non-current Trade Investments | 2,50,000 | ||
| Current Assets | 11,00,000 | ||
| 10% Long-term Borrowings | 20,00,000 | ||
| Current Liabilities | 8,50,000 | ||
|
Long-term Provision |
NIL |
Higher the ratio, the more favourable it is, doesn't stand true for:
Items excluded in liquid assets are:
The primary concern of creditors when assessing the strength of a firm is the firm's ______
What relationship will be established to study:
Trade payables turnover
