Read the passage carefully and answer the next five questions (value in fraction is to be rounded off to the nearest value).
| Particulars | Amount (₹) |
| Revenue from operations | 8,75,000 |
| Creditors | 90,000 |
| Bills receivable | 48,000 |
| Bills payable | 52,000 |
| Purchases | 4,20,000 |
| Trade debtors | 59,000 |
Trade payable turnover ratio is-
Answer & explanation
Correct answer: option 2
The correct answer is option 2- 2.96 times.
Trade payables = Creditors (90,000) + Bills payable (52,000)
= 1,42,000
* As the figures of creditors and bills payables in the beginning of the year are not available. So when only year-end figures are available use the same as it is.
Trade Payable Turnover Ratio = Purchases / Average Trade Payables
= 4,20,000/1,42,000
= 2.96 times