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Question
Compute Trade Receivables Turnover Ratio from the following:
| 31st March 2018 (₹) | 31st March 2019 (₹) | |
| Revenue from Operations (Net Sales) | 8,00,000 | 7,00,000 |
| Debtors in the beginning of year | 83,000 | 1,17,000 |
| Debtors at the end of year | 1,17,000 | 83,000 |
| Sales Return | 1,00,000 | 50,000 |
Solution
Average Debtors = `("Opening Debtors + Closing Debtors")/2`
In 2017 = `(83,000 + 1,17,000)/2` = Rs. 1,00,000
In 2018 = `(1,17,000 + 83,000)/2` = Rs. 1,00,000
Debtors Turnover Ratio = `"Net Sales"/"Average Debtors"`
In 2017 = `(8,00,000)/(1,00,000)` = 8 times
In 2018 = `(7,00,000)/(1,00,000)` = 7 times
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