Answer :
Sure, let's go through the calculations step-by-step based on the data provided:
1. Given Data:
- Cash in Hand = ₹30,000
- Trade Receivables = ₹15,000
- Inventory = ₹10,000
- Prepaid Expenses = ₹5,000
- Creditors = ₹16,000
- Bills Payable = ₹5,000 (assuming from the table's context)
- Sales = ₹2,000
- Purchases = ₹50,000
- Purchases Returns = ₹35,000
### (a) Working Capital Ratio
Working Capital Ratio = Current Assets / Current Liabilities
- Current Assets:
- Cash in Hand = ₹30,000
- Trade Receivables = ₹15,000
- Inventory = ₹10,000
- Prepaid Expenses = ₹5,000
Total Current Assets = 30,000 + 15,000 + 10,000 + 5,000 = ₹60,000
- Current Liabilities:
- Creditors = ₹16,000
- Bills Payable = ₹5,000 (assuming from the given context)
Total Current Liabilities = 16,000 + 5,000 = ₹21,000
Working Capital Ratio = ₹60,000 / ₹21,000 ≈ 3.75
### (b) Acid Test Ratio
Acid Test Ratio = (Current Assets - Inventory) / Current Liabilities
- Current Assets - Inventory:
- Cash in Hand = ₹30,000
- Trade Receivables = ₹15,000
- Prepaid Expenses = ₹5,000
Total Current Assets excluding Inventory = 30,000 + 15,000 + 5,000 = ₹50,000
- Current Liabilities:
- Creditors = ₹16,000
- Bills Payable = ₹5,000
Total Current Liabilities = 16,000 + 5,000 = ₹21,000
Acid Test Ratio = ₹50,000 / ₹21,000 ≈ 3.125
### (c) Inventory Turnover Ratio
Inventory Turnover Ratio = Cost of Goods Sold / Average Inventory
- Cost of Goods Sold (COGS):
- Purchases = ₹50,000
- Purchase Returns = ₹35,000
COGS = ₹50,000 - ₹35,000 = ₹15,000
- Average Inventory:
- Inventory = ₹10,000 (assuming average inventory is the given inventory)
Inventory Turnover Ratio = ₹15,000 / ₹10,000 = 1.5
### (d) Payable Turnover Ratio
Payable Turnover Ratio = Purchases / Average Creditors
- Purchases:
- Purchases = ₹50,000
- Average Creditors:
- Creditors = ₹16,000 (assuming average creditors is the given creditors)
Payable Turnover Ratio = ₹50,000 / ₹16,000 ≈ 3.125
### (e) Average Time of Payment
Average Time of Payment = (365 days) / Payable Turnover Ratio
- Payable Turnover Ratio: ≈ 3.125
Average Time of Payment = 365 / 3.125 ≈ 116.8 days
### Final Answer Summary:
(a) Working Capital Ratio: 3.75
(b) Acid Test Ratio: 3.125
(c) Inventory Turnover Ratio: 1.5
(d) Payable Turnover Ratio: 3.125
(e) Average Time of Payment: 116.8 days
These results align with the calculations based on the provided data.
1. Given Data:
- Cash in Hand = ₹30,000
- Trade Receivables = ₹15,000
- Inventory = ₹10,000
- Prepaid Expenses = ₹5,000
- Creditors = ₹16,000
- Bills Payable = ₹5,000 (assuming from the table's context)
- Sales = ₹2,000
- Purchases = ₹50,000
- Purchases Returns = ₹35,000
### (a) Working Capital Ratio
Working Capital Ratio = Current Assets / Current Liabilities
- Current Assets:
- Cash in Hand = ₹30,000
- Trade Receivables = ₹15,000
- Inventory = ₹10,000
- Prepaid Expenses = ₹5,000
Total Current Assets = 30,000 + 15,000 + 10,000 + 5,000 = ₹60,000
- Current Liabilities:
- Creditors = ₹16,000
- Bills Payable = ₹5,000 (assuming from the given context)
Total Current Liabilities = 16,000 + 5,000 = ₹21,000
Working Capital Ratio = ₹60,000 / ₹21,000 ≈ 3.75
### (b) Acid Test Ratio
Acid Test Ratio = (Current Assets - Inventory) / Current Liabilities
- Current Assets - Inventory:
- Cash in Hand = ₹30,000
- Trade Receivables = ₹15,000
- Prepaid Expenses = ₹5,000
Total Current Assets excluding Inventory = 30,000 + 15,000 + 5,000 = ₹50,000
- Current Liabilities:
- Creditors = ₹16,000
- Bills Payable = ₹5,000
Total Current Liabilities = 16,000 + 5,000 = ₹21,000
Acid Test Ratio = ₹50,000 / ₹21,000 ≈ 3.125
### (c) Inventory Turnover Ratio
Inventory Turnover Ratio = Cost of Goods Sold / Average Inventory
- Cost of Goods Sold (COGS):
- Purchases = ₹50,000
- Purchase Returns = ₹35,000
COGS = ₹50,000 - ₹35,000 = ₹15,000
- Average Inventory:
- Inventory = ₹10,000 (assuming average inventory is the given inventory)
Inventory Turnover Ratio = ₹15,000 / ₹10,000 = 1.5
### (d) Payable Turnover Ratio
Payable Turnover Ratio = Purchases / Average Creditors
- Purchases:
- Purchases = ₹50,000
- Average Creditors:
- Creditors = ₹16,000 (assuming average creditors is the given creditors)
Payable Turnover Ratio = ₹50,000 / ₹16,000 ≈ 3.125
### (e) Average Time of Payment
Average Time of Payment = (365 days) / Payable Turnover Ratio
- Payable Turnover Ratio: ≈ 3.125
Average Time of Payment = 365 / 3.125 ≈ 116.8 days
### Final Answer Summary:
(a) Working Capital Ratio: 3.75
(b) Acid Test Ratio: 3.125
(c) Inventory Turnover Ratio: 1.5
(d) Payable Turnover Ratio: 3.125
(e) Average Time of Payment: 116.8 days
These results align with the calculations based on the provided data.
