From the following information, calculate Opening and Closing Trade
Receivables, if Trade Receivables Turnover Ratio is 3 Times:
(i) Cash Revenue from Operations is 1/3rd of Credit Revenue from Operations.
(ii) Cost of Revenue from Operations is
(iii) Gross Profit is 25% of the Revenue from Operations.
(iv) Trade Receivables at the end are 3 Times more than that of in the beginning.
Answers
Answer:
Trade Receivable Turnover Ratio = Credit Revenue from Operations
_______________________
Average Trade Receivables
3 = 300000
_______
Average Trade Receivables
Average Trade Receivables = 300000
_____________
3
= 1,00,000
Average Trade Receivables =
Opening Trade Receivables + Closing Trade Receivables
_____________________________________________
2
100000 = x + 4x
________
2
So, x would be Rs 40000
:.Opening receivables would be Rs 40,000 and,
Closing Receivables would be Rs 1,60,000 (40,000 x 4)
Revenue from Operations= 300000 + (25/75) * 300000
= Rs 400000
Credit Revenue from Operations =
Total Revenue from Operations -- Cash Revenue from Operations
x = 4,00,000 -- (1/3)x
Credit revenue from operations Rs.3,00,000