Credit Purchases Rs 9 60 000 Cash Purchases Rs 6 40 000 Creditors Rs 2 40 000 Bills Payable Rs...........

General Accounting Principles Ratio analysis

Credit Purchases Rs 9,60,000; Cash Purchases Rs 6,40,000; Creditors Rs 2,40,000; Bills Payable Rs 80,000. Average Payment Period will be :

3 months

4 months

2.4 months

6 months

GIVEN :Credit Purchases Rs 9,60,000; Cash Purchases Rs 6,40,000; Creditors Rs 2,40,000; Bills Payable Rs 80,000.

trade payables turnover ratio = net credit purchases = 5 times

average trade payables

= Rs 9,60,000

Rs. 2,40,000 + Rs. 80,000

= 3 times

Average Payment Period = 12 months

trade payables turnover ratio

= 12 months

= 4 months

By: Abhipedia

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