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Question

# Calculate Trade Receivables Turnover Ratio in each of the following alternative cases: Case 1: Net Credit Sales ₹4,00,000; Average Trade Receivables ₹1,00,000. Case 2: Revenue from Operations (Net Sales) ₹30,00,000; Cash Revenue from Operations, i.e., Cash Sales ₹6,00,000; Opening Trade Receivables ₹2,00,000; Closing Trade Receivables ₹6,00,000. Case 3: Cost of Revenue from Operations or Cost of Goods Sold ₹3,00,000; Gross Profit on Cost 25%; Cash Sales 20% of Total Sales; Opening Trade Receivables ₹50,000; Closing Trade Receivables ₹1,00,000. Case 4: Cost of Revenue from Operations or Cost of Goods Sold ₹4,50,000; Gross Profit on Sales 20%; Cash Sales 25% of Net Credit Sales, Opening Trade Receivables ₹90,000; Closing Trade Receivables ₹60,000.

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Solution

## Case 1 Case 2 Net Credit Sales = Total Sales −Cash Sales = 30,00,000 − 6,00,000 = 24,00,000 Case 3 Cost of Goods Sold = 3,00,000 Gross Profit = 25% on Cost Total Sales = Cost of Goods Sold + Gross Profit = 3,00,000 + 75,000 = 3,75,000 Cash Sales = 20% of Total Sales Credit Sales = Total Sales − Cash Sales = 3,75,000 − 75,000 = 3,00,000 Case 4 Let Sales be = x Let Credit Sales be = a

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