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Average Debtors ₹ 1,80,000 Working Capital Turnover Ratio 8 times Cash Revenue from Operations 25% of Revenue from Operations Gross Profit Ratio 3313% What will be the value of current assets? -

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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 will be the value of current assets?

Options

  • ₹ 1,25,000

  • ₹ 5,000

  • ₹ 1,20,000

  • ₹ 55,000

MCQ

Solution

₹ 1,25,000

Explanation:

Working Capital = Current Assets − Current Liabilities

Current Assets = Working Capital + Current Liabilities

= ₹ 1,20,000 + ₹ 5,000

= ₹ 1,25,000

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Activity Ratio - Current Assets Turnover
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