121 :- Gross Profit at 25% on cost; Gross Profit Rs 5,00,000; Equity Share Capital Rs 10,00,000; Reserves and Surplus Rs 2,00,000; Long term Loan Rs 3,00,000; Fixed Assets (Net) Rs 10,00,000. Calculate Working Capital Turnover Ratio.
Solution :-
Gross Profit = 25% on Cost of Goods Sold
5,00,000 = 25/100 x Cost of Goods Sold
Cost of Goods Sold = Rs 20,00,000
Net Revenue from Operation = Cost of Goods Sold + Gross Profit
= 20,00,000 + 5,00,000
= Rs 25,00,000
Equity Share Capital + Reserves and Surplus = Fixed Assets (Net) + Current Assets + Long term Loans + Current Liabilities
10,00,000 + 2,00,000 + 3,00,000 + Current Liabilities = 10,00,000 + Current Assets
Current Assets – Current Liabilities = Rs 5,00,000
Working Capital = Rs 5,00,000
Working Capital Turnover Ratio = Net Revenue from Operation/Working Capital
= 25,00,000/5,00,000
= 5 Times