Question : Cash Revenue from Operations Rs. 1,30,000; Credit Revenue from Operations Rs.3,80,000; Revenue from Operations Returns Rs. 10,000; Liquid Assets Rs. 1,40,000; Current Liabilities
Rs. 1,05,000 and Inventory Rs. 90,000. Working capital turnover ratio will be
Option 1: 4 times
Option 2: 2 times
Option 3: 2.25 times
Option 4: None of the above
Correct Answer: 4 times
Solution :
Answer =
4 times.
Working capital ratio= $\frac{\text{Net sales}}{\text{Net working capital}}$= $\frac{5,00,000}{1,25,000}$= 4 times.
Net sales= 1,30,000+ 3,80,000- 10,000= 5,10,000- 10,000= 5,00,000.
Working capital= 2,30,000- 1,05,000= 1,25,000
CA= Liquid assets+ stock= 1,40,000+ 90,000= 2,30,000.
Hence, the correct option is 1.
