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    Question

    A company made credit sales of Rs.72 lakh in the year.

    If the debtors value at end of the year was Rs.12 lakh, what will be the average age of receivables, assuming there are 360 days in a year?
    A 6 days Correct Answer Incorrect Answer
    B 30 days Correct Answer Incorrect Answer
    C 60 days Correct Answer Incorrect Answer
    D 90 days Correct Answer Incorrect Answer
    E Cannot be calculated Correct Answer Incorrect Answer

    Solution

    Average age of receivables = 360/receivables turnover Receivables turnover = credit sales/average debtors = 72 lakh/12 lakh = 6 times Therefore, average age of receivables = 360/6 = 60 days

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