110 :- Calculate Trade Payables Turnover Ratio from the following information :
Opening Creditors Rs 1,25,000; Opening Bills Payable Rs 10,000; Closing Creditors Rs 90,000; Closing Bills Payable Rs 5,000; Purchases Rs 9,50,000; Cash Purchases Rs 1,00,000; Purchases Return Rs 45,000.
Solution :-
Trade Payables Turnover Ratio = Net Credit Purchase/Average Trade Payables
= 8,05,000/1,15,000
= 7 Times
Net Credit Purchases = Total Purchases – Cash Purchases – Purchase Returns
= 9,50,000 – 1,00,000 – 45,000
= Rs 8,05,000
Average Trade Payables = Opening Creditors + Opening Bills Payables + Closing Creditors + Closing Bills Payable/2
= 1,25,000 + 10,000 + 90,000 + 5,000/2
= 2,30,000/2
= Rs 1,15,000