Financial Statements

Ratios

Medium

Read the passage carefully and answer the next five questions (value in fraction is to be rounded off to the nearest value):

Particulars	Amount (Rs.)
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

Average payment period is -

133 days

113 days

123 days

103 days

✅ Correct Option: 3

Average Payment Period measures the time taken by a business to pay its creditors and is calculated using the formula:

Average Payment Period = $\frac{\text{Trade Payables}}{\text{Credit Purchases}} \times 365$ days

Trade Payables include both Creditors and Bills Payable:

Trade Payables = Creditors + Bills Payable

Trade Payables = Rs. 90,000 + Rs. 52,000 = Rs. 1,42,000

Assuming all purchases are credit purchases (as no cash purchases are mentioned):

Credit Purchases = Rs. 4,20,000

Applying the formula:

Average Payment Period = $\frac{1,42,000}{4,20,000} \times 365$

Average Payment Period = 0.338 × 365

Average Payment Period = 123.4 days

Rounding off to the nearest value = 123 days

The correct answer is Option 3: 123 days.

2025: 15 May Shift 1

A trader carries an average inventory of Rs. 40,000. His inventory turnover ratio is 8 times. If he sells goods at a profit of 20% on Revenue from operations, find out the gross profit.

2022: 20 July Shift 1

Make the right combination of the ratios that enables to find the short term liquidity.

(a) Return on Equity

(b) Acid Test Ratio

(d) Sacrificing Ratio

(e) Inventory Turnover Ratio

Choose the most appropriate answer from the options given below :

2025: 13 May Shift 2

Trade Receivable Turnover Ratio is-

2025: 13 May Shift 1

Match List-I with List-II

List-I	List-II
(A) Liquidity Ratio	(I) Inventory Turnover ratio
(B) Solvency Ratio	(II) Quick Ratio
(C) Activity (or Turnover) Ratio	(III) Price earning ratio
(D) Profitability Ratio	(IV) Total asset to debt ratio

Choose the correct answer from the options given below:

2025: 13 May Shift 2

Calulate Current Ratio from the following information:

Particulars (Rs.)	Amount (in Rs)
Inventories	60,000
Trade receivables	60,000
Advance tax	4,000
Cash and cash equivalents	50,000
Trade payables	1,30,000
Bank Overdraft	4,000

2022: 23 Aug Shift 2

For calculating EPS, the following order will be followed.

(A) Calculate number of equity shares

(B) Calculate earning available for equity share holders

(D) Compute EPS

Choose the correct answer from the options given below :

Average payment period is -

Solution

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