Question

Equity Share Capital ₹ 15,00,000; Gross Profit on Revenue from Operations, i.e., Net Sales `33 1/3`%;  Cost Revenue from Operatins or Cost of Goods Sold ₹ 20,00,000; Current Assets ₹ 10,00,000; Current Liabilities ₹ 2,50,000. Calculate Working Capital Turnover Ratio 

Answer 1

Net Sales = Cost of Goods sold + Gross Profit

Net Sales = `2000000 + 1/3 of Net Sales`

Let Net Sales =  x

`x = 2000000 + (1x)/3`

Net Sales (x) = `6000000/2` = Rs 3000000

Working Capital = Current Assets - Current Liabilities

= 1000000 - 250000 = 750000

Working Capital Turnover Ratio = `"Net Sales"/"Working Capital"` 

`= 3000000/750000` = 4 times