Opening stock Rs. 2,000 Closing stock Rs. 3,000 Purchases Rs. 31,000 Debentures (representing 1/3 of owner’s capital) Rs. 5,000 Sales Rs. 50,000 Capital turnover ratio will be:

The correct answer is: C. 250%

Capital turnover ratio is a measure of how efficiently a company uses its capital to generate sales. It is calculated by dividing sales by average capital employed. In this case, average capital employed is calculated by adding the opening stock, purchases, and debentures, and then dividing by 2. This gives us:

Average capital employed = (2,000 + 31,000 + 5,000) / 2 = 17,500

The capital turnover ratio is then calculated by dividing sales by average capital employed, which gives us:

Capital turnover ratio = 50,000 / 17,500 = 250%

This means that the company generates 2.5 times as much sales as it has in capital employed. This is a good result, as it indicates that the company is using its capital efficiently.

Option A is incorrect because it is the result of dividing sales by the opening stock. This is not a correct measure of capital turnover, as it does not take into account the other components of capital employed, such as purchases and debentures.

Option B is incorrect because it is the result of dividing sales by the closing stock. This is also not a correct measure of capital turnover, as it does not take into account the other components of capital employed, such as purchases and debentures.

Option D is incorrect because it is the result of dividing sales by the debentures. This is not a correct measure of capital turnover, as it does not take into account the other components of capital employed, such as purchases and opening stock.