Find out Working Capital Turnover Ratio :Cash 20,000, Bills Receivable 10,000, Sundry Debtors 50,000, Stock 40,000,Sundry Creditors + 60.000, Cost of Goods Sold 33,00,000.
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ANSWER :
- ❖ If Cash is Rs. 20,000; Bills Receivable is Rs. 10,000; Sundry Debtors is Rs. 50,000; Stock is Rs. 40,000; Sundry Creditors is Rs. 60,000 and Cost of Goods Sold is Rs. 33,00,000; then Working Capital Turnover Ratio will be 55 times.
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SOLUTION :
❒ Given :-
- Cash = Rs. 20,000
- Bills Receivable = Rs. 10,000
- Sundry Debtors = Rs. 50,000
- Stock = Rs. 40,000
- Sundry Creditors = Rs. 60,000
- Cost of Goods Sold = Rs. 33,00,000.
❒ To Calculate :-
- Working Capital Turnover Ratio = ?
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❒ Calculation :-
Here,
- Cash = Rs. 20,000
- Bills Receivable = Rs. 10,000
- Sundry Debtors = Rs. 50,000
- Stock = Rs. 40,000
∴ Current Assets = Cash + Bills Receivable + Sundry Debtors + Stock
➨ Current Assets = Rs. 20,000 + Rs. 10,000 + Rs. 50,000 + Rs. 40,000
➨ Current Assets = Rs. 1,20,000
And,
- Sundry Creditors = Rs. 60,000
∴ Current Liabilities = Sundry Creditors
➨ Current Liabilities = Rs. 60,000
So,
- ✠ Working Capital = Current Assets - Current Liabilities
➜ Working Capital = Rs. 1,20,000 - Rs. 60,000
➜ Working Capital = Rs. 60,000
Now,
- Cost of Goods Sold = Rs. 33,00,000
- Working Capital = Rs. 60,000
We know that,
Using this formula, we get,
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