Calculate debtors turnover ratio from the following information :- Credit sales RS.2200000
Cash received from debtors RS.204000
Discount Allowed RS.40000
Sales return RS.60000
Opening debtors RS.470000
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Answer: Closing Debtor = 530000
Debtor Turnover Ratio = 4.28 times
Explanation: Net Credit Sales = Credit Sales - Sales Return
=2200000 - 60000
=2140000
Closing Debtor =
Opening Debtor + Credit Sales - Cash received from debtor - Sales Return -Discount allowed
Closing Debtor = 4700000 + 2200000 - 2040000 - 60000 - 40000
= 530000
Average Debtor = 4700000 + 530000 / 2 = 500000
Debtor Turnover Ratio = Net Credit Sales / Average Debtor
= 2140000 / 500000
= 4.28 times
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