📢 Too many exams? Don’t know which one suits you best? Book Your Free Expert 👉 call Now!

    Question

    A company records Net Sales of ₹60,00,000, of which

    50% are on credit. The opening receivables were ₹2,00,000 and the closing receivables were ₹4,00,000. Calculate the Receivables Turnover Ratio.
    A 8.00 times Correct Answer Incorrect Answer
    B 6.25 times Correct Answer Incorrect Answer
    C 10.50 times Correct Answer Incorrect Answer
    D 7.20 times Correct Answer Incorrect Answer
    E 9.75 times Correct Answer Incorrect Answer

    Solution

    The formula is: Receivables Turnover Ratio=Average Receivables/Credit Sales  • Credit Sales = ₹60,00,000 × 50% = ₹30,00,000 • Average Receivables = (₹2,00,000 + ₹4,00,000) ÷ 2 = ₹3,00,000 Now, Receivables Turnover Ratio=30,00,0003,00,000=8.00 timesReceivables Turnover Ratio=3,00,00030,00,000 =8.00times Thus, the company’s Receivables Turnover Ratio = 8.00 times.

    Practice Next
    More Accounts Questions

    Relevant for Exams:

    ask-question