Read the following information carefully and answer the next 5 questions:
| PARTICULARS | AMOUNT (₹) |
| Revenue from operations | 8,75,000 |
| Creditors | 90,000 |
| Bills Receivables | 48,000 |
| Bills Payables | 52,000 |
| Purchases | 4,20,000 |
| Trade debtors | 59,000 |
Calculate Trade payables turnover ratio.
Answer & explanation
Correct answer: option 2
The correct answer is Option (2) → 2.96 times
Trade payables turnover ratio = Net credit purchases ÷ Average trade payables
Trade payables = Creditors + Bills payable
= ₹90,000 + ₹52,000
= ₹1,42,000
Ratio = ₹4,20,000 ÷ ₹1,42,000
= 2.96 times
A turnover ratio is expressed in “times”, not as a percentage or a proportion “: 1”; and bills payable are part of trade payables, so leaving them out (₹4,20,000 ÷ ₹90,000) gives a wrong figure.
NCERT (2026-27 edition):
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