Calculate the trade receivables turnover ratio from the following information-
| PARTICULARS | AMOUNT (₹) |
| Total sales | 200000 |
| Cash sales | 40000 |
| Opening Trade Receivables | 20000 |
| Closing Trade Receivables | 60000 |
Answer & explanation
Correct answer: option 1
The correct answer is option 1 i.e. 4 times.
Trade Receivable Turnover ratio = Net Credit Revenue from Operations/Average Trade Receivable
= 160000/40000
= 4 times
Net Credit Revenue from Operations = TOTAL SALES - CASH SALES
= 200000 - 40000
= ₹160000
Average trade receivables = (opening t.r+ closing t.r)/2
= (20000 + 60000)/2
= ₹40000