Advertisements
Advertisements
Question
What relationship will be established to study:
Trade payables turnover
Solution
This ratio is known as Creditors Turnover Ratio. It is computed to determine the rate at which the amount is paid to the creditors. It establishes the relationship between net credit purchases and average accounts payables.
Payable Turnover Ratio = `"Net Credit Purchases"/"Average Accounts Payable"`
Net Credit Purchases = Total Purchases - Cash Purchases
Average Accounts Receivables = `(("Opening Creditors" + "Opening B/P") + ("Closing Creditors" + "Closing B/P"))/2`
APPEARS IN
RELATED QUESTIONS
From the following Balance Sheet and other information, calculate following ratios: (i) Debt-Equity Ratio (ii) Working Capital Turnover Ratio (iii) Trade Receivables Turnover Ratio
Balance Sheet as at March 31, 2017
| Particulars | Note No. | Rs. |
| I. Equity and Liabilities: | ||
| 1. Shareholders’ funds | ||
| a) Share capital | 10,00,000 | |
| b) Reserves and surplus | 9,00,000 | |
| 2. Non-current Liabilities | ||
| Long-term borrowings | 12,00,000 | |
| 3. Current Liabilities | ||
| Trade payables | 5,00,000 | |
| Total | 36,00,000 | |
| II. Assets | ||
| 1. Non-current Assets | ||
| a) Fixed assets | ||
| Tangible assets | 18,00,000 | |
| 2. Current Assets | ||
| a) Inventories | 4,00,000 | |
| b) Trade Receivables | 9,00,000 | |
| c) Cash and cash equivalents | 5,00,000 | |
| Total | 36,00,000 |
Additional Information: Revenue from Operations Rs. 18,00,000
X Ltd. has a Current Ratio of 3.5 : 1 and Quick Ratio of 2 : 1. If the Inventories is ₹ 24,000; calculate total Current Liabilities and Current Assets.
XYZ Limited's Inventory is ₹3,00,000. Total Liquid Assts are ₹12,00,000 and Quick Ratio is 2:1. Work out Current Ratio.
Shareholders' Funds ₹ 1,60,000; Total Debts ₹ 3,60,000; Current Liabilities ₹ 40,000.
Calculate Total Assets to Debt Ratio.
From the following details, calculate Inventory Turnover Ratio:
| ₹ | |
| Cost of Revenue from Operations (Cost of Goods Sold) | 4,50,000 |
| Inventory in the beginning of the year | 1,25,000 |
| Inventory at the close of the year | 1,75,000 |
Calculate Inventory Turnover Ratio from the following information:
Opening Inventory ₹ 40,000; Purchases ₹ 3,20,000; and Closing Inventory ₹ 1,20,000.
State, giving reason, which of the following transactions would (i) increase, (ii) decrease, (iii) neither increase nor decrease the Inventory Turnover Ratio:
(a) Sale of goods for ₹ 40,000 (Cost ₹ 32,000).
(b) increase in the value of Closing Inventory by ₹ 40,000.
(c) Goods purchased for ₹ 80,000.
(d) Purchases Return ₹ 20,000.
(e) goods costing ₹ 10,000 withdrawn for personal use.
(f) Goods costing ₹ 20,000 distributed as free samples.
From the following information, calculate value of Opening Inventory:
| Closing Inventory | = | ₹ 68,000 |
| Total Sales | = | ₹ 4,80,000 (including Cash Sales ₹ 1,20,000) |
| Total Purchases | = | ₹ 3,60,000 (including Credit Purchases ₹ 2,39,200) |
Goods are sold at a profit of 25% on cost.
From the following Statement of Profit and Loss for the year ended 31st March, 2019 of Rex Ltd., calculate Inventory Turnover Ratio:
STATEMENT OF PROFIT AND LOSS
for the year ended 31st March, 2019
|
Particulars |
Note No. |
Amount (₹) |
| I. Revenue from Operations (Net Sales) |
6,00,000 |
|
| II. Expenses: | ||
|
(a) Purchases of Stock-in-Trade |
3,00,000 |
|
|
(b) Change in Inventory of Stock-in-Trade |
1 |
50,000 |
|
(c) Employees Benefit Expenses |
60,000 |
|
|
(d) Other Expenses |
2 |
45,000 |
| Total Expenses |
4,55,000 |
|
| III. Profit before Tax (I-II) |
1,45,000 |
|
| IV. Less: Tax |
45,000 |
|
| V. Profit after Tax (III-IV) |
1,00,000 |
Notes to Accounts
|
Particulars |
Amount (₹) |
| I. Change in Inventory of stock-in-Trade | |
|
Opening Inventory |
1,25,000 |
|
Less: Closing Inventory |
75,000 |
|
50,000 |
|
| 2. Other Expenses | |
|
Carriage Inwards |
15,000 |
|
Miscellaneous Expenses |
30,000 |
|
45,000 |
From the following information, calculate Operating Ratio:
| Cost of Revenue | Revenue from Operation: | |||
| from Operations (Cost of Goods Sold) | ₹52,000 | Gross Sales | ₹ 88,000 | |
| Operating Expenses | ₹18,000 | Sales Return | ₹ 8,000 |
Accounting ratios are classified as under:
State giving reasons which of the following transactions would improve, reduce and not change the current ratio
The current ratio is 2:1
"Repayment of current liability"
Interest Coverage Ratio can be calculated as ______?
From the following information, calculate stock turnover ratio ______?
Sales: Rs.4, 00,000, Average Stock: Rs.55, 000, Gross Loss Ratio: 10%
Consider the following data and answer the question that follows:
| Particulars | ₹ |
| Revenue From Operations | 12,00,000 |
| Cost of Revenue from Operations | 9,00,000 |
| Operating Expenses | 15,000 |
| Inventory | 20,000 |
| Other Current Assets | 2,00,000 |
| Current Liabilities | 75,000 |
| aid up Share Capital | 4,00,000 |
| Statement of Profit and Loss (Dr.) | 47,500 |
| Total Debt | 2,50,000 |
What is the Operating ratio?
The ______ measures the activity of a firm's inventory.
The ______ ratios provide the information critical to the long run operation to the firm.
Read the following information and answer the given question:
X Ltd. made a profit of 5,00,000 after consideration of the following items:
| ₹ | ||
| (i) | Goodwill written off | 5,000 |
| (ii) | Depreciation on Fixed Tangible Assets | 50,000 |
| (iii) | Loss on Sale of Fixed Tangible Assets (Machinery) |
20,000 |
| (iv) | Provision for Doubtful Debts | 10,000 |
| (v) | Gain on Sale of Fixed Tangible Assets (Land) | 7,500 |
Additional information:
| Particulars | 31.3.2019 (₹) |
31.3.2018 (₹) |
| Trade Receivables | 78,800 | 52,000 |
| Prepaid Expenses | 3,000 | 2,000 |
| Trade Payables | 51,000 | 30,000 |
| Expenses Payable | 20,000 | 34,000 |
How will goodwill written off be adjusted in the cash flow statement?
What relationship will be established to study:
Inventory Turnover
What relationship will be established to study:
Trade Receivables Turnover
