Practicing Success
The formula for calculating the Trade Receivables Turnover Ratio is: |
Total Revenue from operations/Average Debtors Credit Revenue from Operations/Average debtors Net Credit Revenue from Operations/Average Trade Receivables None of the above |
Net Credit Revenue from Operations/Average Trade Receivables |
Trade Receivable Turnover ratio = Net Credit Revenue from Operations/Average Trade Receivable [Where Average Trade Receivable = (Opening Debtors and Bills Receivable + Closing Debtors and Bills Receivable)/2] It needs to be noted that debtors should be taken before making any provision for doubtful debts. |