Question

Calculate Trade payables Turnover Ratio from the following information:
Opening Creditors ₹ 1,25,000; Opening Bills Payable ₹ 10,000; Closing Creditors ₹ 90,000; Closing bills Payable ₹ 5,000; Purchases ₹ 9,50,000; Cash Purchases ₹ 1,00,000; Purchases Return ₹ 45,000.

Answer 1

Net Credit Purchases = Purchases – Cash Purchases – Purchase Return
= Rs 9,50,000 – Rs 1,00,000 – Rs 45,000 = Rs 8,05,000

Average Trade Payables = `(125000 + 10000 + 90000 + 5000)/2` = Rs 115000

Trade Payables Turnover Ratio = `805000/115000`= 7 times