Advertisements
Advertisements
Question
Read the following hypothetical extract of ABC Ltd. and answer the question that follows:
The following information is given:
Trade Receivables Turnover Ratio | 4 times |
Current Liabilities | ₹ 5,000 |
Average Debtors | ₹ 1,80,000 |
Working Capital Turnover Ratio | 8 times |
Cash Revenue from Operations | 25% of Revenue from Operations |
Gross Profit Ratio | `33 1/3%` |
What is the revenue from operations?
Options
₹ 9,60,000
₹ 6,40,000
₹ 1,80,000
₹ 7,20,000
MCQ
Solution
₹ 9,60,000
Explanation:
Trade Receivables Turnover ratio = `"Credit Revenue from Operations"/"Average Trade Receivables"`
4 = `"Credit Revenue from Operations"/(1,80,000)`
Credit Revenue from Operations = ₹ 1,80,000 × 4 = ₹ 7,20,000
Credit Revenue from Operations = 75% of Revenue from Operations
₹ 7,20,000 = 75% of Revenue from Operations
Revenue from Operations = ₹ 9,60,000
shaalaa.com
Activity Ratios - Trade Receivables Turnover Ratio
Is there an error in this question or solution?