Question : Total revenue from operations Rs. 9,00,000, Cash revenue from operations Rs. 3,00,000, Debtors Rs. 1,00,000, B/R Rs. 20,000. Trade Receivables Turnover Ratio will be :
Option 1: 5:1
Option 2: 10:1
Option 3: 7.5:1
Option 4: 9:1
Correct Answer: 10:1
Solution : The formula for trade receivables turnover ratio is equal to
Credit revenue from operations / average trade receivable
Credit revenue from operations= Total revenue for operations- cash revenue from operations.= 9,00,000-3,00,000= 6,00,000
Average trade receivables= 1,00,000+20,000/2 = 1,20,000/2= 60,000
trade receivables turnover ratio = 6,00,000/60,000= 10:1
Trade receivables turnover ratio = 10:1
Hence the correct answer is option 2.


.jpg)

