Calculate the Average Collection Period of the company from the following information.

Credit revenue from operations ₹5,60,000; Debtors ₹70,000; B/R ₹10,000. 

53 Days

The correct answer is option 1- 53 Days.

In order to calculate average Trade Receivables, 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.

Trade Receivable Turnover ratio = Net Credit Revenue from Operations/Average Trade Receivable
                                                  = 5,60,000/80,000
                                                  = 7 times.

Average Collection Period = Number of days or Months/ Trade receivables turnover ratio
                                         = 365/7
                                         = 52.14 days or 53 days.