Question

Calculate the Trade Receivables Turnover Ratio of Planet Ltd. from the particulars given below:

Particulars	(₹)
Revenue from Operations	3,60,000
Cash Revenue from Operations	90,000
Net Closing Trade Receivables	45,000
Provision for Doubtful Debts	10,000

Answer 1

Opening trade receivables = Net closing trade receivables + Provision for doubtful debt

= 45,000 + 10,000

= ₹ 55,000

Average trade receivables

`= "Operating T/R + Closing T/R"/2`

`= (55000+45000)/2`

= ₹ 50,000

Credit Revenue from Operations = Revenue from Operations – Cash Revenue from Operations

= 3,60,000 – 90,000

= ₹ 2,70,000

Trade Receivables Turnover ratio

`= "Credit revenue from operations"/"Average trade receivables"`

`= 270000/50000`

= 5.4 times