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Home Questions 3A9MYJUBE2
Target Exam

CUET

Subject

Accountancy

Chapter

Accounting Ratios

Question:

Calculate the trade payables turnover ratio from the following ratio-

PARTICULARS AMOUNT (₹)
Credit purchases 620000
Purchases return out of credit purchases 20000
Opening creditors 100000
Closing creditors 140000
Opening B/P 25000
Closing B/P 35000
Options:

2 times

4 times

5 times

6 times

Correct Answer:

4 times

Explanation:

Trade Payables Turnover ratio = Net Credit purchases/ Average trade payable
                                            = 600000/150000
                                            = 4 Times

* Net credit purchases = 620000 - 20000
                                  = ₹600000

* Average creditors and B/P = (100000 + 140000 + 25000 + 35000)/ 2
                                         = ₹150000

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