What will be the working capital ratio if: Cash 1,00,000

Question

What will be the working capital ratio if:

| Particulars | Rs. |
| Cash | 1,00,000 |
| Bills Receivable | 50,000 |
| Sundry Debtors | 2,50,000 |
| Stock | 2,00,000 |
| Sundry creditors | 3,00,000 |
| Cost of sales | 15,00,000 |

Answer 1

Working Capital Turnover Ratio = Cost of sales / net working capital

Where Net Working Capital = Curent Assets – Current Liabilities

= Cash + Bills Recievable + Sundry Debtors + Stock – Sundry Creditors

= 1,00,000 + 50,000 + 2,50,000 + 2,00,000 – 3,00,000

= 3,00,000

Working Capital Turnover Ratio = (15,00,000 / 3,00,000)

= 5 times