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Question

Calculate Working Capital Turnover Ratio from the following information :

Rs.Current Assets1,80,000Current Liabilities30,000Cost of Revenue from Operations10,00,000Gross Profit20% of Cost

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Solution

Working Capital Turnover Ratio =Revenue from OperationsWorking Capital

Revenue from Operations = Cost of Revenue from Operations + Gross Profit

= Rs. 10,00,000 + 20% of 10,00,000

= Rs. 10,00,000 + 2,00,000 = Rs. 12,00,000

Working Capital = Current Assets - Current Liabilities

= Rs. 1,80,000 - Rs. 30,000 = Rs. 1,50,000.

Working Capital Turnover Ratio = Rs.12,00,000Rs.1,50,000=8 times.


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