Question : Read the following information carefully and answer the question
|
Particulars |
|
|
Revenue from Operations |
8,75,000 |
|
Creditors |
90,000 |
|
Bills Receivable |
48,000 |
|
Bills Payable |
52,000 |
|
Purchases |
4,20,000 |
|
Trade Debtors |
59,000 |
Q. Calculate Trade Receivables Turnover Ratio.
Option 1: 8.18 times
Option 2: 8.23:1
Option 3: 8.18%
Option 4: 8.81:1
Correct Answer: 8.18 times
Solution : Trade Receivable Turnover Ratio = Revenue from Operations/Average Trade Receivables = Revenue from Operations/(Opening Trade Debtors + Opening Bills Receivables + Closing Trade Debtors + Closing Bills Receivables)/2 = ₹ 8,75,000/(₹ 59,000 + ₹ 48,000) = ₹ 8,75,000/1,07,000 = 8.18 times. Assuming that there are no closing Trade Debtors and Bills Receivables, hence we will not make their average.
