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✦ FREE LEARNING — CLASS 11 & 12 — CBSE · PSEB — ACCOUNTS · ECONOMICS · BST ✦
Calculate the Trade Payables Turnover Ratio for the year 2022-23 in each of the alternative cases:
Case 1: Closing Trade Payables ₹45,000; Net Purchases ₹3,60,000; Purchases Return ₹60,000; Cash Purchases ₹90,000.
Case 2: Opening Trade Payables ₹15,000; Closing Trade Payables ₹45,000; Net Purchases ₹3,60,000.
Case 3: Closing Trade Payables ₹45,000; Net Purchases ₹3,60,000.
Case 4: Closing Trade Payables (including ₹25,000 due to a supplier of machinery) ₹55,000; Net Credit Purchases ₹3,60,000.
Case 1
Net Credit Purchases = Net Purchases − Cash Purchases = 3,60,000 − 90,000 = ₹2,70,000
Trade Payables Turnover Ratio = 2,70,000 ÷ 45,000 = 6 times
(Note: "Net Purchases" is already stated net of Purchases Return, so it is not deducted again.)
Case 2
Average Trade Payables = (15,000 + 45,000) ÷ 2 = ₹30,000
Trade Payables Turnover Ratio = 3,60,000 ÷ 30,000 = 12 times
Case 3
Trade Payables Turnover Ratio = 3,60,000 ÷ 45,000 = 8 times
Case 4
Net Trade Payables for Goods = Closing Trade Payables − Creditors for Machinery = 55,000 − 25,000 = ₹30,000
Trade Payables Turnover Ratio = 3,60,000 ÷ 30,000 = 12 times
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 "T.S. Grewal Class 12 Vol 3 Chapter 4 Q.113 - Accounting Ratios", focusing on key definitions, step-by-step concepts, applications, and revision guidelines relevant to Chapter 4 - Accounting Ratios.
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