Question

Q. 67. Calculate Trade Receivables Turnover Ratio and Average Collection
Period from the following:
3 ₹
Total Revenue from Operations for the year (Total Sales) 12,00,000
Credit Revenue from Operations (Credit Sales):
70% of Total Revenue from Operations
Revenue from Operations Returns (Sales Returns)
(out of Credit Revenue from Operations)
40,000
Opening Trade Receivables
73,250
Closing Trade Receivables
86,750
[Ans. Trade Receivables Turnover Ratio 10 Times; Average Collection Period 37
days.]
Natin and Average Collection​

Answer 1

RECEIVABLES TURNOVER RATIO = NET CREDIT REVENUE

                                                            AVERAGE RECEIVABLES

TOTAL REVENUE = 12,00,000

CREDIT REVENUE = 70% = 8,40,000

SALES RETURN OUT OF CREDIT SALES = 40,000

NET CREDIT REVENUE = 8,40,000 - 40,000 = 8,00,000

AVERAGE RECEIVABLES = OPENING VALUE + CLOSING VALUE

                                                                    2

= 73,250 + 86,750

              2

= 80,000

RECEIVABLES TURNOVER RATIO = 8,00,000

                                                               80,000

= 10 TIMES

AVERAGE COLLECTION PERIOD =                    365                                  

                                                            RECEIVABLES TURNOVER RATIO

= 365

   10

=36.5 DAYS