12th | Accounting Ratios | Question No. 111 To 115 | Ts Grewal Solution 2025-2026

Calculation Trade Payables Turnover Ratio

Question 111:

Calculate Trade Payables Turnover Ratio and Average Debt payment Period from the following information:

	1st April, 2020 ₹	31st March, 2021 ₹
Sundry Creditors	1,50,000	4,50,000
Bills Payable	50,000	1,50,000

Total Purchases ₹21,00,000; Purchases Return ₹1,00,000; Cash Purchases ₹4,00,000.

Answer:

Average Trade Payables	=Opening Creditors & B/P + Closing Creditors & B/P÷2
	=1,50,000 + 50,000 + 4,50,000 + 1,50,000÷2
	= ₹4,00,000
Net Credit Purchases	=Total Purchases - Purchases Return - Cash Purchases
	=21,00,000 - 1,00,000 - 4,00,000 = ₹16,00,000
Trade Payables Turnover Ratio	=Net Credit Purchases /Average Trade Payables =16,00,000/4,00,000 = 4 times
Average Debt Payment Period	=12 Trade Payable Turnover Ratio
	=12/4 =3 months

Question 112:

Closing Trade Payables ₹5,40,000, Net purchases ₹43,20,000, Cash purchases ₹10,80,000. Calculate Trade Payables Turnover Ratio

Answers;

Trade payable turnover ratio= credit purchases/ average trade payable

Trade payable turnover ratio =32,40,000 / 5,40,000= 6 Times

Credit purchases= net purchases - cash purchases

32,40,000 = 43,20,000- 10,80,000

Question 113:

Calculate Trade Payables Turnover Ratio for the year 2022-23 in each of the alternative cases:
Case 1 : Closing Trade Payables ₹45,000; Net Purchases ₹3,60,000; Purchases Return ₹60,000; Cash Purchases ₹90,000.
Case 2 : Opening Trade Payables ₹15,000; Closing Trade Payables ₹45,000; Net Purchases ₹3,60,000.
Case 3 : Closing Trade Payables ₹45,000; Net Purchases ₹3,60,000.
Case 4 : Closing Trade Payables (including ₹25,000 due to a supplier of machinery) ₹55,000; Net Credit Purchases ₹3,60,000.

Answer:

Case 1

Net Credit Purchases = Net Purchases − Cash Purchases

= 3,60,000 − 90,000

= 2,70,000

Trade Payables Turnover Ratio = Net Credit Purchases/Closing Trade Payables

= 2,70,000/45,000

= 6 times

Case 2

Net Purchases = 3,60,000
Average Trade Payables = Opening Trade Payables + Closing Trade Payables/2

= 15,000 + 45,000/2 = 30,000

Trade Payables Turnover Ratio = Net Credit Purchases/Average Trade Payables

= 3,60,000/30,000 = 12 times

Case 3

Trade Payable Turnover Ratio = Net Credit Purchases/Closing Trade Payables

= 3,60,000/45,000

= 8 times

Case 4

Net Credit Payables for Goods = Trade Payables − Creditors for Machinery

= 55,000 − 25,000

= 30,000

Trade Payables Turnover Ratio = Net Credit Purchases/Average Trade Payables

= 3,60,000/30,000

= 12 times

Calculation Opening and Closing trade payable

Question 114:

From the following information, calculate Opening and Closing trade payable:
Cash purchases 25% of total Purchases, Revenue from operation ₹3,00,000, Gross profit 25% on revenue from Operations, Opening Inventory ₹75,00,000, Closing Inventory ₹150,000, Trade Payables turnover Ratio 3 times, Closing Trade Payables were ₹75,000 in excess of opening trade payables

Answers;

1	Cost of revenue from operation	= revenue from operation - gross profit
		=3,00,000 -( 25% of revenue from operations) = 3,00,000 -( 25% of 3,00,000) = 3,00,000 - 75,000
	Cost of revenue from operation	=2,25,000

2.	Total purchases Total purchases	= cost of revenue + closing inventory - opening inventory = 2,25,000 + 1,50,000 - 75,000 = 3,00,000

3.	Net credit purchases	= total purchases - Cash purchases = 3,00,000 - 25% of 3,00,000 3,00,000 - 75,000
	Net credit purchases	= 2,25,000

4.	Trade payable turnover ratio 3 3x + 3 X + 2,25,000 6x + 2,25,000 6x = X = X= Closing trade payables =	= net credit purchases / average trade payable = 2,25,000/ X + X + 75,000/2 = 4,50,000 = 4,50,000 4,50,000 -2,25,000 2,25,000/6 37,500 (Opening trade payable) 37,500 + 75,000= 1,12,500