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Question 54 Chapter 4 of +2-B
Trade Payable Turnover Ratio
54. (Trade Payable T/O Ratio & Average Payment Period) Calculate (i) Trade Payable turnover ratio and (ii) average payment period.
| 2016 ₹ | 2017 ₹ | |
| Annual credit purchases | 6,80,000 | 7,50,000 |
| Creditors on January 1 | 80,000 | 60,000 |
| Creditors on December 31 | 60,000 | 90,000 |
Take 360 days in a year
2016
| Trade Payable Turnover ratio | = | Net credit Purchases |
| Average Trade Payable | ||
| Average Trade Payable | = | Opening trade Payable + Closing Trade Payable |
| 2 | ||
| Net credit Purchases | = | ₹ 6,80,000 |
| = | ₹ 80,000 + ₹ 60,000 | |
| 2 | ||
| = | ₹ 70,000 | |
| Trade Payable Turnover ratio | = | ₹ 6,80,000 |
| ₹ 70,000 | ||
| = | 9.71 times | |
| Average Payment period | = | No. of days in a year |
| Trade Payable Turnover ratio | ||
| = | 360 | |
| 9.71 | ||
| = | 37 days |
2017
| Net credit Purchases | = | ₹ 7,50,000 |
| = | ₹ 60,000 + ₹ 90,000 | |
| 2 | ||
| = | ₹ 75,000 | |
| Trade Payable Turnover ratio | = | ₹ 7,50,000 |
| ₹ 75,000 | ||
| = | 10 times | |
| Average Payment period | = | No. of days in a year |
| Trade Payable Turnover ratio | ||
| = | 360 | |
| 10 | ||
| = | 36 days |
Accounting & Commerce Educator
Sarbjit Singh holds a B.Com and M.Com degree and has over 12 years of teaching experience in double entry bookkeeping, financial accounting, and business studies.
This guide covers "Question 54 Chapter 4 of +2-B - USHA Publication 12 Class", focusing on key definitions, step-by-step concepts, applications, and revision guidelines relevant to USHA Publication Part 2 volume I.
It is primarily curated for Class 11 and Class 12 high school commerce, accounting, and economics students, as well as aspirants preparing for board exams or CA Foundation.
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