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