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

Answer 1

$$\begin{gathered} \mathrm{Average}\mathrm{Debtors}=\frac{\mathrm{Opening}\mathrm{Debtors}+\mathrm{Closing}\mathrm{Debtors}}{2} \\ \mathrm{In}2017=\frac{83,000+1,17,000}{2}=\mathrm{Rs}1,00,000 \\ \mathrm{In}2018=\frac{1,17,000+83,000}{2}=\mathrm{Rs}1,00,000 \end{gathered}$$

$$\begin{gathered} \mathrm{Debtors}\mathrm{Turnover}\mathrm{Ratio}=\frac{\mathrm{Net}\mathrm{Sales}}{\mathrm{Average}\mathrm{Debtors}} \\ \mathrm{In}2017=\frac{8,00,000}{1,00,000}=8\mathrm{Times} \\ \mathrm{In}2018=\frac{7,00,000}{1,00,000}=7\mathrm{Times} \end{gathered}$$