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 payment period.
Answer & explanation
Correct answer: option 1
The correct answer is option 1- 123 days.
Average payment period = 365 / Trade payables turnover ratio
= 365/ 2.96
= 123.3 or 123 days