Question

Read the following information to answer the below questions:   Net Sales = 40,00,000 (20 % GP Element) out of which 40% is on credit. Opening Inventories were 60 % of closing inventories. Opening Receivables are 120,000.   

Calculate the receivables turnover ratio of the company?

A 6.92 times Correct Answer Incorrect Answer
B 10.43 times Correct Answer Incorrect Answer
C 17.39 Correct Answer Incorrect Answer
D 4.71 Correct Answer Incorrect Answer

Solution

Credit sales/Average accounts receivables 16,00,000 / 2,30,000 =6.96 times Credit sales = 40,00,000(total sales) * 40% =16,00,000 Average accounts receivables = 1,20,000 (opening debtors) + 3,40,000 (Closing debtors) / 2 = 230,000

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