**SOLUTION**

**Working Capital Turnover Ratio = Revenue from Operation / Working Capital****Gross Profit = 25% on CostLet Cost of Goods sold be Rs. 100.**

**Gross Profit = Rs. 25**

**Revenue from Operations = (100 + 25) = Rs. 125**

When Gross profit is Rs. 25, revenue from operations is = Rs. 125

And, if Gross profit is Rs. 5,00,000 then revenue from operations will be = Rs. (5,00,000 × 125 / 25) = Rs. 25,00,000

Capital Employed = Shareholder’s Funds + Non-Current Liabilities

= (10,00,000 + 2,00,000 + 3,00,000)

= Rs. 15,00,000

Also,

Capital Employed = Non-Current Assets + Working Capital

Alternatively, Working Capital = Capital Employed – Non-current Assets

= (15,00,000 – 10,00,000)

= Rs. 5,00,000

When Gross profit is Rs. 25, revenue from operations is = Rs. 125

And, if Gross profit is Rs. 5,00,000 then revenue from operations will be = Rs. (5,00,000 × 125 / 25) = Rs. 25,00,000

Capital Employed = Shareholder’s Funds + Non-Current Liabilities

= (10,00,000 + 2,00,000 + 3,00,000)

= Rs. 15,00,000

Also,

Capital Employed = Non-Current Assets + Working Capital

Alternatively, Working Capital = Capital Employed – Non-current Assets

= (15,00,000 – 10,00,000)

= Rs. 5,00,000

**Hence, Working Capital Turnover Ratio = 25,00,000 / 5,00,000**

**= 5 times**