✓ Board-verified
Accountancy · 2023 · 3 marks
CBSE 2023 · Region 4 · Set 1 · Q32
'These ratios are calculated for measuring the efficiency of operations of business based on effective utilisation of resources.' (a) Identify the types of ratios being discussed above. (b) Explain any two ratios of the types of ratios identified in (a) above.
Marking-scheme solution
(a)
Turnover Ratios or Activity Ratios
(b)
Any two of the following:
1. Inventory Turnover ratio
• It expresses the relationship between the cost of revenue from operations and average
inventory.
• Inventory Turnover Ratio = Cost of Revenue from Operations / Average Inventory
2. Trade Receivables Turnover ratio
• It expresses the relationship between credit revenue from operations and trade
receivable.
• Trade Receivable Turnover ratio = Net Credit Revenue from Operations/Average
Trade Receivable
3. Trade Payables Turnover ratio
• It expresses relationship between credit purchases and trade payables.
• Trade Payables Turnover ratio = Net Credit purchases/ Average trade payable
4. Net assets or Capital employed Turnover Ratio
• It reflects relationship between revenue from operations and net assets (capital
employed) in the business.
• Net Assets or Capital Employed Turnover ratio
=Revenue from Operations/ Capital Employed
Page $\displaystyle 19$
5. Fixed assets Turnover Ratio
• It reflects relationship between revenue from operations and net fixed assets.
•
Fixed asset turnover Ratio =Net Revenue from Operation / Net Fixed Assets
6. Working Capital Turnover Ratio
• It reflects relationship between revenue from operations and working capital.
• Working Capital Turnover Ratio =Net Revenue from Operation /Working Capital
More from Accounting Ratios
- The current ratio of Jack Ltd. is 3·2: 1 and the quick ratio is 1·5: 1. The excess of current assets over…2025
- The current assets of X Ltd. are ₹ 2,00,000 and its current liabilities are ₹ 1,50,000. If, its working…2023
- Prepare a 'Common S ize Balance Sheet' from the following B alance Sheet of Shree Ltd. as at 31st March,…2022
- Identify whi2024
- Identify and state the significance of any two ratios that are calculated to measure the efficiency of…2023
- From the following information, calculate 'Interest Coverage Ratio': Shareholders' funds 30,00,000 8%…2026
- The quick ratio of Theta Ltd. is 0.8:1. Which of the following transactions will result in decrease in this…2026
- Which of the following is not a Solvency Ratio?2023
CBSE Class 12 Accountancy past-paper question from the 2023board exam, with the answer as CBSE’s own marking scheme gives it. Where our answers come from.