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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


Team Careers360 7th Jan, 2024
Answer (1)
Team Careers360 16th Jan, 2024

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.

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