Capital Employed Rs. 12,00,000; Net Fixed Assets Rs. 8,00,000; Cost of Goods Sold or Cost of Revenue from Operations Rs. 40,00,000; Gross Profit is 20% on Cost. Calculate Working Capital Turnover Ratio.

SOLUTION

Cost of Goods Sold = 40,00,000
Gross Profit = 20% of Cost
Gross Profit = 20 / 100 × 40,00,000
= 8,00,000

Total Sales	Cost of goods sold + Gross profit
	= 40,00,000 + 8,00,000 = 48,00,000

Working Capital	Capital employed – Net Fixed Assets
	= 12,00,000 – 8,00,000 = 4,00,000

Working Capital turnover ratio	Net sales / Working Capital
	= 48,00,000 / 4,00,000 = 12 Times