Question 121:
Capital Employed ` 12,00,000; Net Fixed Assets 8,00,000; Cost of Goods Sold or Cost of Revenue from Operations ` 40,00,000; Gross Profit is 20% on Cost. Calculate Working Capital Turnover Ratio.
Answer:
Cost of Goods Sold = 40,00,000
Gross Profit = 20% of Cost
Gross Profit =20/100×40,00,000=8,00,000
|
Total Sales |
= Cost of goods sold + Gross profit |
|
|
=40,00,000+8,00,000 =48,00,000 |
|
Working Capital |
= Capital employed – Net Fixed Assets =12,00,000-8,00,000 =4,00,000 |
|
Working Capital turnover ratio |
= Net sales /Working Capital |
|
|
=48,00,000/4,00,000 |
|
|
= 12 Times |
= 5 Times
Question 122:
Calculate Working Capital Turnover Ratio from the following
information:
Revenue from Operations ` 15,00,000; Current
Assets ` 6,25,000; Total
Assets ` 10,00,000;
Non-current Liabilities ` 5,00,000,
Shareholders' Funds ` 2,50,000.
Answer:
Working Capital Turnover Ratio = Net Sales/Working Capital
Revenue from Operations (Net Sales) = ` 15,00,000
(Given)Working Capital=Current Assets-Current Liabilities
Current Assets = 6,25,000
(Given)Current Liabilities= ?
Total Assets = Total Liabilities = ` 10,00,000
(Given)Total Liabilities = Shareholders' Funds + Non-Current Liabilities + Current Liabilities
10,00,000 =2,50,000+5,00,000+Current Liabilities
Current Liabilities = ` 2,50,000
Working Capital=6,25,000-2,50,000= ` 3,75,000
Working Capital Turnover Ratio=15,00,000/3,75,000
Working Capital Turnover Ratio =4 times
Question 123:
A company earns Gross Profit of 25% on cost. For the year ended 31st March,
2017 its Gross Profit was ` 5,00,000; Equity
Share Capital of the company was ` 10,00,000; Reserves
and Surplus ` 2,00,000; Long-term
Loan ` 3,00,000 and Non-current Assets were `
10,00,000.
Compute the 'Working Capital Turnover Ratio' of the company.
Answer:
Working Capital Turnover Ratio= Revenue from
Operation/Working Capital
Gross Profit = 25% on Cost
Let Cost of Goods sold be ` 100.
Gross Profit = ` 25
Revenue from Operations = ` (100 + 25) = `
125
When Gross profit is ` 25, revenue from
operations is= ` 125
And, if Gross profit is ` 5,00,000 then
revenue from operations will be= ` (5,00,000 × 125/25)
= ` 25,00,000
Capital Employed = Shareholder’s Funds + Non-Current Liabilities
= ` (10,00,000 +
2,00,000 + 3,00,000) = ` 15,00,000
Also, Capital Employed = Non Current Assets + Working Capital
Alternatively, Working Capital = Capital Employed – Non-current Assets = `
(15,00,000 – 10,00,000)= ` 5,00,000
Hence, Working Capital Turnover Ratio= 25,00,000/5,00,000= 5 times
Fixed Assets Turnover Ratio
Question 124: Net Fixed Assets ` 5,00,000, Revenue from Operations 25,00,000.
Calculate Fixed Assets Turnover Ratio.
Answer:
Fixed Assets Turnover Ratio= Revenue from Operations/ Net Fixed Assets
Fixed Assets Turnover Ratio= 25,00,000/ 5,00,000= 5 Times
Question 125: Fixed Assets (at Cost) `7,00,000, Accumulated Depreciation `1,00,000, Credit Revenue from Operations `17,00,000, Cash Revenue from Operations `1,00,000. Calculate Fixed Assets Turnover Ratio.
Answer:
Fixed Assets Turnover Ratio= Revenue from Operations/ Net Fixed Assets
Fixed Assets Turnover Ratio= 18,00,000/ 6,00,000= 3 Times
Working note:
(i) Net Fixed Assets= Fixed Assets (at Cost) - Accumulated Depreciation
Net Fixed Assets= 7,00,000 - 1,00,000
Net Fixed Assets= 6,00,000
(ii) Revenue from operation= Credit Revenue from Operations + Cash Revenue from Operations
Revenue from operation= 17,00,000+ 1,00,000=18,00,000
Ts Grewal Solution 2023-2024
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Class 12 / Volume – I
Chapter 3 – Accounting Ratio