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
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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
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