Question

151. From the following calculate:
(b) Working Capital Turnover Ratio.
(a) Current Ratio; and
Revenue from Operations
Total Assets
Shareholders' Funds
Non-current Liabilities
Non-current Assets
1,50,000
1,00,000
60,000
20,000
50,000
(AI 2014)​

Answer 1

Answer:

(a) Current Ratio = 2.5 : 1

(b) Working Capital Turnover Ratio = 5 Times

Explanation:

Given :

Revenue from Operations = Rs 1,50,000

Total Assets = Rs 1,00,000

Shareholders' Funds = Rs 60,000

Non-current Liabilities = Rs 20,000

Non-current Assets = Rs 50,000

To find :

• (a) Current Ratio and
• (b) Working Capital Turnover Ratio

Solution :

• (a) Current Ratio :

Current Ratio = $\dfrac{Current \: Assets}{Current \: Liabilities}$

Current Assets = Total Assets - Non - current Assets

⇒ 1,00,000 - 50,000

⇒ 50,000

Current Assets = Rs 50,000

• Current Liabilities :

Total Assets = Shareholders' Funds + Non-current Liabilities + Current Liabilities

⇒ 1,00,000 = 60,000 + 20,000 + Current Liabilities

⇒ 1,00,000 = 80,000 + Current Liabilities

⇒ 1,00,000 - 80,000 = Current Liabilities

⇒ 20,000 = Current Liabilities

Current Liabilities = Rs 20,000

★ Current Ratio =

$\dfrac{Current \: Assets}{Current \: Liabilities} = \dfrac{50,000}{20,000}$

⇒ $\dfrac{2.5}{1}$

____________________________

(b) Working Capital Turnover Ratio:

$\dfrac{Revenue \: from \:Operations}{Working \: Capital}$

Revenue from Operations = Rs 1,50,000

Working Capital = Current Assets - Current Liabilities

⇒ 50,000 - 20,000

⇒ 30,000

Working Capital = Rs 30,000

★ Working Capital Turnover Ratio=

$\dfrac{Revenue \: from \: Operations}{Working \: Capital}$

⇒ $\dfrac{1,50,000}{30,000}$

⇒ 5 Times

Therefore,

(a) Current Ratio = 2.5 : 1

(b) Working Capital Turnover Ratio = 5 Times