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प्रश्न
Following figures have been obtained from the books of Pawan Roadways Ltd:
| 2022 ₹ |
2023 ₹ |
|
| Revenue from Operations (at Gross Profit of 25%) | 36,00,000 | 60,00,000 |
| Trade Receivables on 1st January | 5,40,000 | |
| Trade Receivables on 31st December | 6,60,000 | 9,40,000 |
| Inventory on 1st January | 6,50,000 | |
| Inventory on 31st December | 7,00,000 | 10,00,000 |
Calculate the Trade Receivables Turnover Ratio. Also Calculate Inventory Turnover Ratio. Give necessary Comments.
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उत्तर
For 2022
Trade Receivables Turnover Ratio = `"Credit Revenue from Operations"/"Average Trade Receivables"`
Average Trade Receivables = `("Opening Trade Receivables" + "Closing Trade Receivables")/2`
= `(₹ 5,40,000 + ₹ 6,60,000)/2`
= `(₹ 12,00,000)/2`
= ₹ 6,00,000
Trade Receivables Turnover Ratio = `(₹ 36,00,000)/(₹ 6,00,000)`
= 6 Times
Inventory Turnover Ratio = `"Cost of Revenue from Operations"/"Average Inventory"`
Gross Profit = Revenue from Operations − Cost of Revenue from Operations
25% of ₹ 36,00,000 = ₹ 36,00,000 − Cost of Revenue from Operations
`25/100 xx ₹ 36,00,000` = ₹ 36,00,000 − Cost of Revenue from Operations
Cost of Revenue from Operations = ₹ 36,00,000 − ₹ 9,00,000
= ₹ 27,00,000
Average Inventory = `"Opening Inventory" + "Closing Inventory"/2`
= `(₹ 6,50,000 + ₹ 7,00,000)/2`
= `(₹ 13,50,000)/2`
= ₹ 6,75,000
Inventory Turnover Ratio = `(₹ 27,00,000)/(₹ 6,75,000)`
= 4 Times
For 2023
Trade Receivables Turnover Ratio = `"Credit Revenue from Operations"/"Average Trade Receivables"`
Average Trade Receivables = `("Opening Trade Receivables" + "Closing Trade Receivables")/2`
= `(₹ 6,60,000 + ₹ 9,40,000)/2`
= `(₹ 16,00,000)/2`
= ₹ 8,00,000
Trade Receivables Turnover Ratio = `(₹ 60,00,000)/(₹ 8,00,000)`
= 7.5 Times
Inventory Turnover Ratio = `"Cost of Revenue from Operations"/"Average Inventory"`
Gross Profit = Revenue from Operations − Cost of Revenue from Operations
25% of ₹ 60,00,000 = ₹ 60,00,000 − Cost of Revenue from Operations
`25/100 xx ₹ 60,00,000` = ₹ 60,00,000 − Cost of Revenue from Operations
Cost of Revenue from Operations = ₹ 60,00,000 − ₹ 15,00,000
= ₹ 45,00,000
Average Inventory = `("Opening Inventory" + "Closing Inventory")/2`
= `(₹ 7,00,000 + ₹ 10,00,000)/2`
= `(₹ 17,00,000)/2`
= ₹ 8,50,000
Inventory Turnover Ratio = `(₹ 45,00,000)/(₹ 8,50,000)`
= 5.29 Times
Comments:
(1) The Trade Receivables Turnover Ratio increased from 6 to 7.5 times by 2023. It shows that the sum from Trade Receivables is being collected quickly.
(2) In 2023, the Inventory Turnover Ratio also increased. It shows that inventory is being converted into revenue from operations quickly. As a result, the management’s sales strategy is highly effective.
