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Question
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
Solution
Net Sales = Cost of Goods sold + Gross Profit
Net Sales = `2000000 + 1/3 of Net Sales`
Let Net Sales = x
`x = 2000000 + (1x)/3`
Net Sales (x) = `6000000/2` = Rs 3000000
Working Capital = Current Assets - Current Liabilities
= 1000000 - 250000 = 750000
Working Capital Turnover Ratio = `"Net Sales"/"Working Capital"`
`= 3000000/750000` = 4 times
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| ₹ | |
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| ₹ | ₹ | |||
| Credit Sales | 5,00,000 | Decrease in Inventory | 10,000 | |
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| Cost of Revenue | Revenue from Operation: | |||
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| ₹ | ₹ | |||
| Revenue From Operations, i.e., Net Sales Gross Profit | 1,50,000 | Opening Inventory | 29,000 | |
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|
Particulars |
₹ |
||
|
Inventory |
30,000 |
||
| Prepaid Expenses | 2,000 | ||
| Other Current Assets | 50,000 | ||
| Current Liabilities | 40,000 | ||
| 12% Debentures | 30,000 | ||
| Accumulated Profits | 10,000 | ||
| Equity Share Capital | 1,00,000 | ||
|
Non-current Investments |
15,000 |
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