113 :- Calculate Trade Payables Turnover Ratio for the year 2022 – 23 in each of the alternative cases:
Case 1 : Closing Trade Payables Rs 45,000; Net Purchases Rs 3,60,000; Purchase Return Rs 60,000; Cash Purchases Rs 90,000.
Case 2 : Opening Trade Payables Rs 15,000; Closing Trade Payables Rs 45,000; Net Purchases Rs 3,60,000.
Case 3 : Closing Trade Payables Rs 45,000; Net Purchases Rs 3,60,000.
Case 4 : Closing Trade Payables (including Rs 25,000 due to a supplier of Machinery) Rs 55,000; Net Credit Purchases Rs 3,60,000.
Solution :-
CASE 1
Net Credit Purchase = Net Purchase – Cash Purchase
= 3,60,000 – 90,000
= Rs 2,70,000
Average Trade Payables = Closing Trade Payables
= Rs 45,000
Trade Payables Turnover Ratio = Net Credit Revenue from Operations/Average Trade Payables
= 2,70,000/45,000
= 6 Times
CASE 2
Net Credit Purchases = Net Purchases
= Rs 3,60,000
Average Trade Payables = Opening Trade Payables + Closing Trade Payables/2
= 15,000 + 45,000/2
= Rs 30,000
Trade Payable Turnover Ratio = Net Credit Purchases/Average Trade Payables
= 3,60,000/30,000
= 12 Times
CASE 3
Average Trade Payables = Closing Trade Payables
= Rs 45,000
Net Credit Purchases = Net Purchases
= Rs 3,60,000
Trade Payable Turnover Ratio = Net Credit Purchase/Average Trade Payables
= 3,60,000/45,000
= 8 Times
CASE 4
Average Trade Payables = Closing Trade Payable – Due to Supplier of Machinery
= 55,000 – 25,000
= Rs 30,000
Net Credit Purchase = Rs 3,60,000
Trade Payable Turnover Ratio = Net Credit Purchase/Average Trade Payables
= 3,60,000/30,000
= 12 Times