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    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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