112 :- Closing Trade Payables Rs 5,40,000, Net Purchases Rs 43,20,000, Cash Purchases Rs 10,80,000. Calculate Trade Payables Turnover Ratio.
Solution :-
Net Credit Purchases = Net Purchases – Cash Purchases
= 43,20,000 – 10,80,000
= Rs 32,40,000
Average Trade Payables = Closing Trade Payables (As in the absence of Opening Trade Payables, Closing Trade Payables are Taken as Average Trade Payables)
= Rs 5,40,000
Trade Payables Turnover Ratio = Net Credit Purchases/Average Trade Payables
= 32,40,000/5,40,000
= 6 Times