Question

Fixed Assets (at Cost) ₹ 7,00,000, Accumulated Depreciation ₹ 1,00,000, Credit Revenue from Operations 17,00,000, Cash Revenue from Operations 1,00,000. Calculate the Fixed Assets Turnover Ratio.

Answer 1

Calculation of Total Revenue from Operations:

\[\text{Total Revenue from Operations} = \text{Credit Revenue} + \text{Cash Revenue}\]

$$\text{Total Revenue from Operations} = ₹ 17,00,000 + ₹ 1,00,000$$

$${\text{Total Revenue from Operations} = ₹ 18,00,000}$$

Calculation of Net Fixed Assets:

$$\text{Net Fixed Assets} = \text{Fixed Assets (at Cost)} - \text{Accumulated Depreciation}$$

$$\text{Net Fixed Assets} = ₹ 7,00,000 - ₹ 1,00,000$$

$${\text{Net Fixed Assets} = ₹ 6,00,000}$$

Calculation of Fixed Assets Turnover Ratio:

$$\text{Fixed Assets Turnover Ratio} = \frac{\text{Total Revenue from Operations}}{\text{Net Fixed Assets}}$$

$$\text{Fixed Assets Turnover Ratio} = \frac{18,00,000}{6,00,000} = 3$$

Fixed Assets Turnover Ratio = 3 Times