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Question
Calculate Trade Receivables Turnover Ratio from the following figures:
| ₹ | |
| Total Revenue from Operations (Total Sales) | 10,00,000 |
| Cash Revenue from Operations (Cash Sales) | 1,50,000 |
| Revenue from Operations Return (Sales Returns) | 10,000 |
| Opening Debtors | 50,000 |
| Opening B/R | 10,000 |
| Closing Debtors | 60,000 |
| Closing B/R | 20,000 |
Numerical
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Solution
Trade Receivables Turnover Ratio = `"Credit Revenue from Operations"/"Average Debtors and B/R"`
Credit Revenue from Operations = Total Sales − Cash Sales − Sales Return
= ₹ 10,00,000 − ₹ 1,50,000 − ₹ 10,000
= ₹ 8,40,000
Average Debtors and B/R = `(₹ 50,000 + ₹ 10,000 + ₹ 60,000 + ₹ 20,000)/2`
= `(₹ 1,40,000)/2`
= ₹ 70,000
Trade Receivables Turnover Ratio = `(₹ 8,40,000)/(₹ 70,000)`
= 12 Times
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