Question

From the following figures obtained from Arjun Ltd, calculate the trade payable turnover ratio and credit payment period (in days).

Particulars	Rs.
Credit purchases during 2018 -2019	9,50,000
Trade creditors as on 01.04.2018	60,000
Trade creditors as on 3 1.03.2019	50,000
Bills payable as on 0L04.2018	45,000
BillS payable as on 3 1.03.2019	35000

Answer 1

Trade payable turnover ratio = `"Net Credit purchases"/"Average Trade Payables"`

Average Trade Payables = `("Opening trade payable + Closing trade payable")/2`

Average Trade Payables = `(60,000 + 50,000 + 45,000 + 35,000)/2`

`= 190000/2` = Rs. 95,000

Trade payable turnover ratio = `950000/95000` = 10 Times

Credit payment period (in days) = `"No. of days in a year"/"Trade payable turnover ratio"`

Credit payment period = `365/10` = 36.5 days