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Question
The current assets of X Ltd. are ₹ 2,00,000 and its current liabilities are ₹ 1,50,000. If its working capital turnover ratio is 6 times, its revenue from operations will be ______.
Options
₹ 2,00,000
₹ 3,00,000
₹ 2,50,000
₹ 1,50,000
Solution
The current assets of X Ltd. are ₹ 2,00,000 and its current liabilities are ₹ 1,50,000. If its working capital turnover ratio is 6 times, its revenue from operations will be ₹ 3,00,000.
Explanation:
Working Capital Turnover Ratio = `"Revenue from Operations"/"Working Capital"`
6 = `"Revenue from Operations"/"Current Assets - Current Liabilities"`
6 = `"Revenue from Operations"/ (₹ 2,00,000 - ₹ 1,50,000) `
6 = `"Revenue from Operations"/(₹ 50,000)`
Revenue from Operations = 6 × ₹ 50,000
Revenue from Operations = ₹ 3,00,000
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