Question
Calculate Debtors Ratio (365 days of the year.)
Refer the following summarized Balance Sheet & P&L of AB Ltd. as on 31 ‐ 3 ‐ 2022. Summarized Profit and Loss Account is as under for the year ending on 31 ‐ 3 ‐ '04: Rs. Sales (25% Cash sales) 80,00,000 Less: Cost of goods sold 56,00,000 Gross Profit 24,00,000 Net profit (Before interest and tax 50%) 9,00,000 Calculate the following ratios:Solution
Debtors Ratio (Avg. debt collection period) = Debtors + Bills receivable / Credit sales X 365 days = 4,60,000 + 60,000 / 60,00,000 X 365 days = 0.461 X 365 days = 31.63 days i.e., 32 days
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