Working capital and its turnover: Class 12 practice
Working capital = current assets − current liabilities. Read the method, follow the three worked examples, then try the six questions.
What you should know first
- Current assets and liabilities
The idea behind working capital and its turnover
Working capital = current assets − current liabilities. Working capital turnover = revenue from operations ÷ working capital; it shows how much revenue each rupee of working capital supports.
Step-by-step method
- Add current assets; add current liabilities.
- Working capital = CA − CL.
- Turnover = revenue ÷ working capital.
Worked example 1 (Basic)
Inventory ₹60,000, debtors ₹80,000, cash ₹30,000, creditors ₹80,000, bills payable ₹10,000. Find working capital.
- CA = ₹1,70,000, CL = ₹90,000
- WC = ₹80,000
- Answer: ₹80,000
Worked example 2 (Standard)
Working capital is ₹1,20,000 and revenue from operations ₹3,60,000. Find the working capital turnover.
- 360000 ÷ 120000
- Answer: 3 times
Worked example 3 (Challenge)
Working capital is ₹60,000 and revenue from operations ₹1,20,000; machinery ₹5,00,000 is also owned. Find the working capital turnover.
- Machinery is not a current asset — ignore it
- 120000 ÷ 60000
- Answer: 2 times
Common mistakes and misconceptions
- Including fixed assets
- Dividing working capital by revenue
Practice questions
- (Basic) Inventory ₹10,000, debtors ₹60,000, cash ₹30,000, creditors ₹20,000, bills payable ₹0. Find working capital.
- (Basic) Inventory ₹70,000, debtors ₹30,000, cash ₹40,000, creditors ₹50,000, bills payable ₹30,000. Find working capital.
- (Standard) Working capital is ₹1,10,000 and revenue from operations ₹3,30,000. Find the working capital turnover.
- (Standard) Working capital is ₹1,10,000 and revenue from operations ₹2,20,000. Find the working capital turnover.
- (Challenge) Working capital is ₹1,30,000 and revenue from operations ₹3,90,000; machinery ₹3,00,000 is also owned. Find the working capital turnover.
- (Challenge) Working capital is ₹70,000 and revenue from operations ₹1,40,000; machinery ₹5,00,000 is also owned. Find the working capital turnover.
Answer key with full working
- Q1: CA = ₹1,00,000, CL = ₹20,000 → WC = ₹80,000 → Answer: ₹80,000
- Q2: CA = ₹1,40,000, CL = ₹80,000 → WC = ₹60,000 → Answer: ₹60,000
- Q3: 330000 ÷ 110000 → Answer: 3 times
- Q4: 220000 ÷ 110000 → Answer: 2 times
- Q5: Machinery is not a current asset — ignore it → 390000 ÷ 130000 → Answer: 3 times
- Q6: Machinery is not a current asset — ignore it → 140000 ÷ 70000 → Answer: 2 times
Syllabus note
This skill is listed under "Accounting Ratios" for Class 12 in the NCERT/CBSE books. ICSE, IGCSE, IB and state boards may teach it in a different chapter or year.
Answers on this page are generated and automatically re-checked by a second, independent calculation. They have not been reviewed by a teacher — if you spot a problem, tell us on WhatsApp.
Related practice and notes
- Current ratio and quick ratio
- Debt–equity ratio
- Inventory turnover ratio
- Gross profit and net profit ratios
- Trade receivables turnover
- Return on investment (capital employed)
- Interest on capital and drawings
- New and sacrificing ratio on admission
- Gaining ratio on retirement
- Valuation of goodwill
- All Class 12 practice
Frequently asked questions
Which chapter is working capital and its turnover in?
"Accounting Ratios", Class 12 Accountancy (NCERT/CBSE). Other boards may place it differently.
How were the answers checked?
Answers on this page are generated and automatically re-checked by a second, independent calculation. They have not been reviewed by a teacher — if you spot a problem, tell us on WhatsApp.