You Are Able To Collect The Following Information About A Company For Two Years:- Accounting ratios

You are able to collect the following information about a company for two years:

	2015-16	2016-17
Trade receivables on Apr. 01	Rs.4,00,000	Rs.5,00,000
Trade receivables on Mar. 31		Rs.5,60,000
Stock in trade on Mar. 31	Rs.6,00,000	Rs.9,00,000
Revenue from operations (at gross profit of 25%)	Rs.3,00,000	Rs. 24,00,000

Calculate Inventory Turnover Ratio and Trade Receivables Turnover Ratio.

Inventory Turn Over Ratio 

or, 

Cost of Revenue from Operations = Revenue from Operations - Gross Profit

= 24,00,000 - 6,00,000

= 18,00,000

= `\frac{6,00,000+9,00,000}{2}`

= 7,50,000

Inventory Turnover Ratio = `\frac{18,00,000}{7,50,000}` = 2.4 times

= `\frac{5,00,000}{5,60,000}`

= 5,30,000

Trade Receivable Turnover Ratio = `\frac{24,00,000}{5,30,000}` = 4.53 times

Chapter-5 Accounting Ratios-II

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