Read the passage carefully and answer the next five questions (value in fraction is to be rounded off to the nearest value).
| Particulars | Amount (₹) |
| Revenue from operations | 8,75,000 |
| Creditors | 90,000 |
| Bills receivable | 48,000 |
| Bills payable | 52,000 |
| Purchases | 4,20,000 |
| Trade debtors | 59,000 |
Trade Receivable Turnover Ratio is-
Answer & explanation
Correct answer: option 2
The correct answer is option 2- 8.18 times.
Average Trade Receivable = Trade debtors + Bills receivable
= 59,000 + 48,000
= 1,07,000
Trade Receivable Turnover Ratio = Net Credit Revenue from operations / Average Trade Receivable
= 8,75,000/1,07,000
= 8.177 times or 8.18 times
This figure(1,07,000) has not been divided by 2, in order to calculate average Trade Receivables as the figures of debtors and bills receivables in the beginning of the year are not available. So when only year-end figures are available use the same as it is.