Question

Question #9 Calculate working capital turnover ratio from the following information. • Current assets are worth Rs. 1,50,000/- • Current Liabilities are worth Rs. 50,000/- • Net credit sale is 4/5 of net sales and cash sales is Rs. 50,000/-​

Answer 1

Answer:

Working Capital Turnover Ratio :

Total Sales / Working Capital

Total Sales :

here, credit sale is 4/5 of net sales (total sales), which means remaining 1/5 is cash sales and it is given that cash sales is 50,000.

Therefore, credit sales is 4 times 50,000 = 2,00,000.

Total Sales = 2,50,000

Working Capital :

Working Capital = Current Assets - Current Liabilities

= 150,000 - 50,000

= 100,000

Therefore, Working Capital Turnover Ratio

= Total Sales / Working Capital

= 250,000 / 100,000

= 2.5 Times.

(hope my answer was helpful to you, if you liked my answer please mark it the brainliest I'll be very grateful!!!)

Answer 2

Answer:

Working Capital Turnover Ratio = 2.5 times.

Explanation:

★ Working Capital Turnover Ratio :

$\dfrac{Net \: Sales }{Working \: Capital}$

Net Sales = Cash Sales + Credit Sales

Let,

Net Sales = x

$\longrightarrow\:x \: = \: 50,000 \: + \dfrac{ 4 }{ 5 } x$

$\longrightarrow\:x-\dfrac{4}{5} x \: = \: 50,000$

$\longrightarrow\:\dfrac{1}{5}x \: = \: 50,000$

$\longrightarrow\:x \: = \: 50,000\times \: 5$

$\longrightarrow\:x \: = \: 2,50,000$

Net Sales = Rs. 2,50,000

• Net credit sale is 4/5 of net sales = 2,00,000

Net Sales = Cash Sales + Credit Sales

2,50,000 = 50,000 + 2,00,000

Working Capital = Current Assets - Current Liabilities

$\longrightarrow$ 1,50,000 - 50,000

$\longrightarrow$ 1,00,000

Working Capital = 1,00,000

★ Working Capital Turnover Ratio :

$\dfrac{Net \: Sales }{Working \: Capital}$

$\longrightarrow \: \dfrac{2,50,000}{1,00,000} \: = \: 2.5$

$\longrightarrow$ 2.5

Therefore, Working Capital Turnover Ratio = 2.5 times.