Question

4,80,000
Total Revenue from Operations for the year (Total Sales)
Cash Revenue from Operations : being 20% of Credit
Revenue from Operations
Opening Trade Receivables
Excess of Closing Trade Receivables over Opening Trade
Receivables
-60,000
30,000
calculate Trade Receivable Turnover Ratio and Average Collection period ​

Answer 1

Answer:

let credit revenue from operations be Rs x

cash revenue from operations 20% of x

Total revenue from operations=x+0.20x

=1.20x

1.20x=480000

x=480000/1.20

x=400000

Credit revenue=4 lacs

Cash revenue=80000

Opening trade receivables=60000

Closing Trade receivables-openingtrade receivables=30000

Closing Trade receivables=90000

Average Trade receivables=(op+closing)/2

AVERAGE TRADE RECEIVABLES=150000/2

AVERAGE TRADE RECEIVABLES=75000

TRADE RECEIVABLE TURNOVER RATIO= CREDIT REVENUE/AVERAGE TRADE RECEIVABLES

=400000/75000

=5.33 times

Average Collection Period=365 days/5.33

= 68.48

=68 days approximately

Explanation:

Hope it helps

Regards

Muskan Goel