calculate the business payment period ratio with the following information:-
Cash purechase 2,00,000 total purchase 509000
initial creditor 60,000
final creditor 70000
last due bill 40000 initial bill due 30000
purchase return 9000
give right answer......fast
Answers
Explanation:
Trade Receivables Turnover Ratio = Net Credit Sales/Average Trade receivables
Trade Receivables Turnover Ratio =
Rs.4,50,000/Rs.1,00,000=4.5
Average collection period
=
average daily creditsales
-----------------------------------------
average accounts receivable
Average daily credit sales =4,50,000/360
∗
=1,250
=1,00,000/1,250
=80 days
Therefore, on an average debtors take 80 days to pay
∗
360 days considered
Gross Profit Ratio
=GrossProfit/Sales×100
=(6,00,000−4,20,000)/6,00,000×100=30%
Working Notes:
(1) Credit Sales=Total sales - Cash sales
Cash Sales =25% of Rs.6,00,000=Rs.1,50,000
Credit Sales =Rs.6,00,000−Rs.1,50,000=Rs.4,50,000
(2) Average Trade Receivables = (Opening Trade Receivables + Closing Trade Receivables )/2
=(Rs.60,000+Rs.1,40,000)/2
=Rs.1,00,000