The annual credit sales of a firm is ₹ 12,80,000 and the debtors amount to ₹ 1,60,000. The debtors…
Debtors Turnover Ratio = Annual Credit Sales / Debtors = Rs. 12,80,000 / Rs. 1,60,000 = 8 times. Using a standard 360-day commercial year, the Average Collection Period =…
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The annual credit sales of a firm is ₹ 12,80,000 and the debtors amount to ₹ 1,60,000. The debtors turnover and average collection period are _____.
Answer and explanation
Correct answer B
Debtors Turnover Ratio = Annual Credit Sales / Debtors = Rs. 12,80,000 / Rs. 1,60,000 = 8 times. Using a standard 360-day commercial year, the Average Collection Period = 360 / Debtors Turnover = 360 / 8 = 45 days.
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