Ownclasses

Compute Working Capital Turnover Ratio using the following information:

Particulars Amount (Rs)
Cash Sales 1,30,000
Credit Sales 3,80,000
Sales Returns 10,000
Liquid Assets 1,40,000
Current Liabilities 1,05,000
Inventory 90,000
Answer

Working capital Turnover ratio = Net sales/Working capital.
Net sales = Total sales - sales return
               (1,30,000 + 3,80,000) – 10,000 = 5,00,000
Working capital = Current assets - current liabilities
                     = (1,40,000 + 90,000) - 1,05,000 = 1,25,000
Working capital turnover ratio = 5,00,000/1,25,000 = 4 times.