Question
Calculate Working Capital Turnover Ratio from the following information:
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Answer
Working Capital Turnover Ratio $=\frac{\text{Net Revenue from Operations}}{\text{Working Capital}}$
Net Revenue from Operations = Cost of Revenue from Operations + Gross Profit
Revenue from Operations include a profit of 24% on revenue from operations, therefore goods costing ₹ 76 must have been sold for ₹ 100. As such,
If Cost of Revenue from Operations is ₹ 76, Revenue from Operations are ₹ 100.
If Cost of Revenue from Operations is ₹ 30,40,000, Revenue from Operations are $\frac{100}{76}\times30,40,000=₹\ 40,00,000$
Working Capital = Current Assets - Current Liabilities
= ₹ 4,60,000- ₹ 60,000 = ₹ 4,00,000
Working Capital Turnover Ratio $=\frac{₹\ 40,00,000}{₹\ 4,00,000}=10\text{ Times}$
Net Revenue from Operations = Cost of Revenue from Operations + Gross Profit
Revenue from Operations include a profit of 24% on revenue from operations, therefore goods costing ₹ 76 must have been sold for ₹ 100. As such,
If Cost of Revenue from Operations is ₹ 76, Revenue from Operations are ₹ 100.
If Cost of Revenue from Operations is ₹ 30,40,000, Revenue from Operations are $\frac{100}{76}\times30,40,000=₹\ 40,00,000$
Working Capital = Current Assets - Current Liabilities
= ₹ 4,60,000- ₹ 60,000 = ₹ 4,00,000
Working Capital Turnover Ratio $=\frac{₹\ 40,00,000}{₹\ 4,00,000}=10\text{ Times}$
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₹
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6,00,000
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| Revenue from operations | 300% of cost of materials consumed | 200% of cost of materials consumed |
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| Tax rate | 50% | 50% |
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| Particulars | Note No. | 31st March, 2023 (₹) | 31st March, 2022 (₹) |
| I. EQUITY AND LIABILITIES | |||
| 1. Shareholders' Funds | |||
| (a) Share Capital | 80,00,000 | 60,00,000 | |
| (b) Reserves and Surplus | 12,00,000 | 8,00,000 | |
| 2. Non-Current Liabilities | |||
| Long-term Borrowings | 24,00,000 | 20,00,000 | |
| 3. Current Liabilities | |||
| Short-term Borrowings | 4,00,000 | 12,00,000 | |
| Total | 1,20,00,000 | 1,00,00,000 | |
| II. ASSETS | |||
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| (i) Property, Plant and Equipment | 80,00,000 | 60,00,000 | |
| (ii) Intangible Assets | 4,00,000 | 12,00,000 | |
| 2. Current Assets | |||
| (a) inventories | 24,00,000 | 20,00,000 | |
| (b) Cash and Cash Equivalents | 12,00,000 | 8,00,000 | |
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