12th | Accounting Ratios | Question No. 101 To 105 | Ts Grewal Solution 2022-2023

Calculate Working Capital Turnover Ratio from the following information;

Revenue from Operations (Cost of Goods Sold) 24,00,000

Current Assets 10,00,000

Current Liabilities 4,00,000

Answer:

Working Capital = Current Assets - Current Liabilities

Working Capital = 10,00,000 – 4,00,000

Working Capital = 6,00,000

Working Capital Turnover Ratio = Revenue from operation/ Working Capital

Working Capital Turnover Ratio = 24,00,000/ 6,00,000

Working Capital Turnover Ratio = 4 Times

From the following information, calculate Working Capital Turnover Ratio:

Cost of Revenue from Operations (Cost of Goods Sold) `5,00,000

Current Assets `2,50,000

Current Liabilities `1,50,000

Answer:

Revenue from Operations: Cash Sales  ` 5,00,000; Credit Sales  ` 6,00,000; Sales Return  ` 1,00,000. Current Assets  ` 3,00,000; Current Liabilities  ` 1,00,000. Calculate Working Capital Turnover Ratio.

Answer:

Net Sales = Cash Sales + Credit Sales − Sales Returns

= 5,00,000 + 6,00,000 − 1,00,000 = 10,00,000

Working Capital= Current Assets - Current Liabilities 

Working Capital Turnover=  Net sales/ Working Capital

                                                =10,00,000/2,00,000

= 5 Times

Equity Share Capital  ` 15,00,000; Gross Profit on Revenue from Operations, i.e., Net Sales 33 1/3% ; Cost Revenue from Operations or Cost of Goods Sold  ` 20,00,000; Current Assets  ` 10,00,000; Current Liabilities  ` 2,50,000. Calculate Working Capital Turnover Ratio. 

Answer:

Net Sales = Cost of Goods sold + Gross Profit
Net Sales =20,00,000+1/3 of Net Sales
Let Net Sales =  x
x=20,00,000+ x/3

Net sales (x)= 60,00,000/2=30,00,000

Working Capital= Current Assets - Current Liabilities 

=10,00,000-2,50,000

=7,50,000

Working Capital Turnover=  Net sales/ Working Capital

                                          =30,00,000/7,50,000

     = 4 Times

Gross Profit at 25% on cost; Gross profit  ` 5,00,000; Equity Share Capital  ` 10,00,000; Reserves and Surplus  2,00,000; Long-term Loan  3,00,000; Fixed Assets (Net)  ` 10,00,000. Calculate Working  Capital Turnover Ratio

Answer:

Gross Profit = 25% on Cost
Let Cost be =  ` x
Gross Profit =x×25/100=25x/100

Or, 5,00,000=25x/100

Or, x=5,00,000×100/25=20,00,000
∴ Cost of Goods Sold = 20,00,000

Net sales =Cost of goods sold+Gross profit

            =20,00,000+5,00,000=25,00,000

Capital employed =Equity share Capital +Reserve and surplus+long – term loan

                                    =10,00,000+200,000+3,00,000=15,00,000

Working Capital = Capital employed- Fixed Assets

                           =15,00,000-10,00,000=5,00,000

Working Capital Turnover=  Net sales/ Working Capital

                                          =25,00,000/5,00,000

     = 5 Times