Financial Statements

Ratios

Easy

Particulars	₹
Revenue from Operations	8,75,000
Creditors	90,000
Bills Receivable	48,000
Bills Payable	52,000
Purchases	4,20,000
Trade Debtors	59,000

Calculate Trade Payables Turnover Ratio.

29.6 times

2.96 times

29.60%

2.69 : 1

✅ Correct Option: 2

$\text{Trade Payables Turnover Ratio} = \frac{\text{Credit Purchases}}{\text{Average Trade Payables}} = \frac{4,20,000}{1,42,000} = 2.96 \text{ times}$

This ratio shows how many times a company pays off its suppliers during a year. A higher ratio means the company is paying its dues more frequently.

Note 1: Since there’s no information about cash purchases, we assume all purchases are on credit.

Note 2: We don't have opening balances for creditors or bills payable, so we use the year-end figures as the average.

$\text{Average Trade Payables} = \text{Bills Payables} + \text{Trade Creditors} = 52,000 + 90,000 = 1,42,000$

This ratio helps understand how quickly the company is clearing its dues to suppliers. It is always shown in times, not in percentage.

2026: 24 May Shift 1

X Ltd., has a current ratio of 2:1 and quick ratio of 1.5:1. If excess of current assets over quick assets represented by inventories is Rs. 24,000. Calculate current assets and current liabilities.

2025: 26 May Shift 2

Which of the following ratios is considered as the solvency ratio?

2026: 13 May Shift 2

The current ratio is 2 : 1. Which of the following transactions would improve, reduce or not change the current ratio?

Match List-I with List-II

List-I	List-II
(A) Payment of unclaimed dividend	(I) Improve
(B) Purchase of Machinery against Issue of Shares	(II) Reduce
(C) Sale of goods on credit	(III) Will not be recorded
(D) Purchased goods on credit	(IV) Does not Change

Choose the correct answer from the options given below:

2025: 30 May Shift 2

Calculate the Current Ratio from the following information:

Particulars	(Rs.)
Inventories	50,000
Trade receivables	50,000
Advance tax	4,000
Cash and cash equivalant	30,000
Trade payables	1,00,000
Short-term borrowings (bank overdraft)	4,000

2025: 22 May Shift 1

Which of the following are the objectives of Ratio Analysis?

(A) To know the areas of the business which need more attention.

(B) To provide a deeper analysis of the profitability, liquidity, solvency and efficiency levels in the business.

(D) To provide information derived from financial statements useful for making projections and estimates for the future.

Choose the correct answer from the options given below:

2023: 29 May Shift 2

Every company analyse its earning capacity of the business which is outcome of utilisation of resources employed in the business. To analyse profitability company can use:

A. Dividend Payout Ratio

B. Return on Net Worth

C. Gross Profit Ratio

D. Quick Ratio

E. Inventory Turnover Ratio

Choose the choose answer from the option given below:

Calculate Trade Payables Turnover Ratio.

Solution

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