Read the following information carefully and answer the next 5 questions:
| PARTICULARS | AMOUNT (₹) |
| Revenue from operations | 8,75,000 |
| Creditors | 90,000 |
| Bills Receivables | 48,000 |
| Bills Payables | 52,000 |
| Purchases | 4,20,000 |
| Trade debtors | 59,000 |
Calculate average collection period.
Answer & explanation
Correct answer: option 3
The correct answer is option 3- 45 days.
Average collection period = 365 / Trade receivables turnover ratio
= 365/8.18
= 44.62 or 45 days