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

Trade payable turnover ratio is-

2.86 times

2.96 times

2.56 times

2.16 times

✅ Correct Option: 2

Trade Payable Turnover Ratio = $\frac{\text{Net Credit Purchases}}{\text{Average Trade Payables}}$

Calculating Trade Payables:

Trade Payables include both Creditors and Bills Payable.

Trade Payables = Creditors + Bills Payable

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

Net Credit Purchases = 4,20,000 (given)

Trade Payable Turnover Ratio = $\frac{4,20,000}{1,42,000}$

= 2.9577...

= 2.96 times (rounded off to nearest value)

The correct answer is Option 2: 2.96 times

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.

2026: 29 May Shift 2

__________ are especially interested in the average payment period, since it provides them with a sense of the bill-paying patterns of the firm.

2025: 2 June Shift 2

The main advantage of ratio analysis is.

2025: 26 May Shift 2

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

2022: 23 Aug Shift 2

If there is Revenue from Operation Rs. 1,20,000 and gross profit is 20% of cost, then the amount of gross profit will be :

2026: 6 June Shift 1

Given the following information:

Revenue from Operations Rs. 3,40,000

Cost of Revenue from Operations Rs. 1,20,000

Selling expenses Rs. 80,000

Administrative Expenses Rs. 40,000

Calculate the operating ratio.

Trade payable turnover ratio is-

Solution

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