Working capital turnover ratio shows the relationship between and revenue from operations

working capital

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fixed capital

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Solution

The correct option is A working capital
Working capital turnover ratio shows the relationship between working capital and revenue from operations. It shows the number of times the working capital has been rotated in generating sales.

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Q. Working Capital Turnover Ratio
= Revenue from Operations / __________.

Q. 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.

The following Balance Sheet and other information, calculate following ratios:

(i) Debt-Equity Ratio (ii) Working Capital Turnover Ratio (iii) Trade Receivables Turnover Ratio

Balance Sheet as at March 31, 2017
Particulars	Note No.	Rs.
I. Equity and Liabilities:
1. Shareholders’ funds
a) Share capital		10,00,000
b) Reserves and surplus		9,00,000
2. Non-current Liabilities
a) Long-term borrowings		12,00,000
3. Current Liabilities
a) Trade payables		5,00,000
Total		36,00,000
II. Assets
1. Non-current Assets
a) Fixed assets
Tangible assets		18,00,000
2. Current Assets
a) Inventories		4,00,000
b) Trade Receivables		9,00,000
c) Cash and cash equivalents		5,00,000
Total		36,00,000

Additional Information: Revenue from Operations Rs. 18,00,000 Calculate:

i) Debt-Equity Ratio

ii) Working Capital Turnover Ratio

iii) Trade Receivables Turnover Ratio

(Debt-Equity Ratio 0.63:1; Working Capital Turnover Ratio 1.39 times; Trade Receivables Turnover Ratio 2 times)

Q. From the following information, calculate Inventory Turnover Ratio; Operating Ratio and Working Capital Turnover Ratio:
Opening Inventory ₹ 28,000; Closing Inventory ₹ 22,000; Purchases ₹ 46,000; Revenue from Operations, i.e., Net Sales ₹ 80,000; Return ₹10,000; Carriage Inwards ₹ 4,000; Office Expenses ₹ 4,000; Selling and Distribution Expenses ₹ 2,000; Working Capital ₹ 40,000.

Calculate Working Capital Turnover Ratio from the following information :

$\begin{matrix} Rs. Current Assets & 1, 80, 000 Current Liabilities & 30, 000 Cost of Revenue from Operations & 10, 00, 000 Gross Profit & 20% of Cost \end{matrix}$

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Working capital turnover ratio shows the relationship between and revenue from operations

The correct option is A working capitalWorking capital turnover ratio shows the relationship between working capital and revenue from operations. It shows the number of times the working capital has been rotated in generating sales.

The correct option is A working capital
Working capital turnover ratio shows the relationship between working capital and revenue from operations. It shows the number of times the working capital has been rotated in generating sales.