Question : Which of the following statements is false with respect to trade receivable turnover ratio?
Option 1: Trade Receivables include Debtors and Bills Receivable.
Option 2: Average trade receivables are calculated by adding the trade receivables at the beginning of a period as well as at the end of the period and by dividing the total by 2.
Option 3: While calculating this ratio, provision for bad and doubtful debts is not deducted from trade receivables.
Option 4: None of the above.
Correct Answer: None of the above.
Solution : Answer = None of the above.
All statements regarding the Trade receivable turnover Ratio are correct.
Trade receivable turnover ratio = $\frac{\text{Net Credit Sales}}{\text {Average Trade Receivable}}$
Hence, the correct option is 4.
