Question : ------------------- ratio indicates the relationship between credit revenue from Operations and average trade receivables during the year.
Option 1: Inventory turnover ratio
Option 2: Capital turnover ratio
Option 3: Trade receivable turnover ratio
Option 4: Trade payable turnover ratio
Correct Answer: Trade receivable turnover ratio
Solution : Answer = Trade receivable turnover ratio
The Trade Receivable Turnover Ratio indicates the relationship between Credit Revenue from operation and Average Trade Receivable. The turnover ratio assesses the efficiency of credit sales collection by dividing total credit sales by the average accounts receivable. A higher ratio signals effective management, while a lower one may indicate issues with credit or collection procedures. Hence, the correct option is 3.
Question : -------------------ratio indicates the relationship between credit purchases and average trade payables during the year.
Question : -----------------ratio indicates the relationship between the cost of revenue from operations (i.e., Cost of Goods Sold) during the year and average inventory kept during that year.
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