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Question : Working Capital turnover ratio will be - 

Particulars    

Amount

Current assets

500000

Current Liabilities

100000

Revenue from operation

2800000

Option 1: 7 Times

Option 2: 5.8 times

Option 3: 8 times

Option 4: 10 times


Team Careers360 2nd Jan, 2024
Answer (1)
Team Careers360 20th Jan, 2024

Correct Answer: 7 Times


Solution : By dividing the firm's net annual sales by its typical working capital, one can determine the working capital turnover ratio. Total Liabilities for Total Assets is subtracted to get Working Capital.

Hence the working capital turnover will be - 

Working capital = Current assets - Current liabilities

                         = Rs.500000 - Rs.100000

                         = Rs.400000

Turnover = Rs.2800000

= Turnover / Working Capital

= Rs.2800000/Rs.400000

= 7 Times

Hence the correct answer is option 1.

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