Question

Calculate the debtors turnover ratio from the following information:
Particulars
Gross Sales
9,00,000
Opening Debtors
83,000
Closing Debtors
1,17,000
Sales Returns
1,00,000
Cash Sales
2,50,000
​

Answer 1

Answer:

Average debtors = (Rs. 40,000 + Rs. 1,20,000)/2 = Rs. 80,000

Cash sales = 20% of total sales

= Rs. 4,00,000 x 20%

= Rs. 80,000

Net credit sales = Total sales - Cash sales

= Rs. 4,00,000 - Rs. 80,000

= Rs. 3,20,000

Debtors turnover ratio = Net credit sales/Average debtors

= Rs. 3,20,000/Rs. 80,000

= 4 Times...