Question

When net sales for the year are ₹ 2,50,000 and debtors ₹ 50,000, the average collection period is:

A 60 days Correct Answer Incorrect Answer
B 45 days Correct Answer Incorrect Answer
C 42 days Correct Answer Incorrect Answer
D 73 days Correct Answer Incorrect Answer
E 84 days Correct Answer Incorrect Answer

Solution

Debtors turnover ratio = 250,000/50,000 = 5 times Average collection period = 365 days/5 =73 days

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