The total debtors of X Ltd. were 9,00.000. It had created a provision for<br />10% for bad and doubtful debts. What amount of debtors will be<br />calculating the “Trade Receivables Turnover Ratio"?
Answers
Hope this will help you.
Explanation:
For calculating the trade receivable turnover ratio we do not deduct the provision for for bad and doubtful debts, So that it may not give a false impressions that trade receivable are collected quickly.
So as per our question we will calculate trade receivable turnover ratio at the total value of debtor that is rs 900000
Answer:
The question is explained below.
Explanation:
Trade receivable turnover ration indicates the relationship between the credit revenue and the average trade receivable during the year. we can calculate the trade receivable turnover ratio by dividing Net credit revenue from operation from Average trade receivable.
For calculating Trade receivable turnover ratio we will not deduct provision for bad and doubtful debts from total trade receivable. We do not deduct the provision because otherwise it will give false impression that the trade receivable are collected quickly.
Explanation: