Working capital rs:250000,cost of revenue from operations rs:1000000,gross profit on sale 20% calculate working capital turnover ratio
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Your answer will be 3.2
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Working capital turnover ratio = 5 times
Explanation:
Given:
Working Capital = 2,50,000
Cost of revenue from operations = 10,00,000
Gross profit on sale = 20% = 0.20
Working capital turnover ratio = ?
Computation of net sales :
Net sales = Cost of revenue from operations + Gross profit
Net sales = Cost of revenue from operations + 0.20 (Net sales)
0.80 Net sales = Cost of revenue from operations
0.80 Net sales = 10,00,000
Net sales = 12,50,000
Working capital turnover ratio = Net sales / Working Capital
= 12,50,000 / 2,50,000
= 5 times
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