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
Trade receivables = Trade debtors + Bills receivable
= ₹59,000 + ₹48,000
= ₹1,07,000
Trade receivables turnover ratio = ₹8,75,000 ÷ ₹1,07,000
= 8.18 times
Average collection period = 365 ÷ 8.18
= 44.6, i.e. 45 days
NCERT (2026-27 edition):
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