Practice - Activity (Turnover) Ratios
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Practice Questions
Test your understanding with targeted questions
What is the formula for the Inventory Turnover Ratio?
💡 Hint: Remember the key components involved in the calculation.
Define Debtors Turnover Ratio.
💡 Hint: Think about its impact on cash flow.
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Interactive Quizzes
Quick quizzes to reinforce your learning
What is the primary purpose of Activity Ratios?
💡 Hint: Think about what these ratios measure in the context of a business.
True or False: A high Debtors Turnover Ratio suggests a company is collecting its receivables effectively.
💡 Hint: Recall the impact of the ratio on cash flow.
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Challenge Problems
Push your limits with advanced challenges
A company has COGS of ₹600,000 and an average inventory of ₹150,000. Calculate its Inventory Turnover Ratio. What does it indicate?
💡 Hint: Remember, higher ratios typically imply better inventory management.
A retailer had annual Net Credit Sales of ₹1,200,000 and Average Trade Debtors of ₹400,000. Calculate the Debtors Turnover Ratio and discuss its implications.
💡 Hint: Reflect on what this means for cash flow and collection effectiveness.
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