Question

Following particulars are related to Fast Cargo Ltd.:

	₹	₹
Trade Payables		1,40,000
Trade Receivables	2,10,000	2,00,000
Less: Provision for Doubtful Debts	10,000
Inventory (Excluding Loose Tools ₹ 20,000)		1,49,000
Goodwill		50,000
Cash and Bank balance		36,000
Bank Overdraft		20,000
Marketable Securities		80,000
Outstanding Expenses		10,000
Provision for Tax		30,000
Prepaid Rent		3,000
Cost of Revenue from Operations		6,30,000

Gross profit 25% on Revenue from Operations.

Trade Receivables Turnover Ratio will be:

विकल्प

• 4.2 times

• 4 times

• 3.94 times

• 3.75 times

Answer 1

4 times

Explanation:

Gross Profit is 25% on Revenue from Operations.

Hence, Goods costing ₹ 75 must have been sold for ₹ 100.

Revenue from Operation = `6,30,000 xx 100/75`

= ₹ 8,40,000

Trade Receivables Turnover Ratio = `"Revenue from Operation"/"Trade Receivables"`

= `(8,40,000)/(2,10,000)`

= 4 times