Question

Total Purchases Rs. 4,50,000; Cash Purchases Rs.1,50,000; Creditors Rs.50,000;
Bills Payable Rs.10,000. Trade Payables Turnover Ratio will be:
9 times
7.5 times​

Answer 1

Given:

Total Purchases Rs. 4,50,000;

Cash Purchases Rs.1,50,000;

Creditors Rs.50,000;

Bills Payable Rs.10,000.

To Find:

Trade Payables Turnover Ratio

Solution:

Purchases = Total Purchases - Cash Purchases

= 4,50,000 - 1,50,000

= 3,00,000

Average Trade Paybles = Bills Payable + Creditors/2

= 10,000 + 50,000/2

= 60,000/2

= 30,000

Ratio = Purchases/ Average Trade Paybles

= 3,00,000/30,000

= 10

Answer: The Turnover Ratio is 10 times