Determine debtors turnover ratio if, closing debtors is Rs 40,000, total sales is Rs 4,00,000. Credit sales is 25% of total sales and excess of closing debtors over opening debtors is Rs 30,000.

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Solution

The correct option is A
4 Times

Credit Sales = 25% of Rs, 4,00,000
= Rs 1,00,000.

Closing Debtors = Rs 40,000
Opening Debtors = Rs 40,000 - Rs 30,000
= Rs 10,000

Average Debtors = (Rs 40,000 + Rs 10,000)/2
= Rs 25,000

Debtors turover ratio = Rs 1,00,000 / Rs 25,000
= 4 times

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