Closing Trade Receivables Rs 90,000; Revenue from Operations

98 :- Closing Trade Receivables Rs 90,000; Revenue from Operations Rs 7,20,000, Cash Revenue from Operations Rs 1,80,000. Provision for Doubtful Debts Rs 8,000. Calculate Trade Receivables Turnover Ratio.

Solution :-

Average Trade Receivables = Closing Trade Receivables
                                             = Rs 90,000

Credit Revenue from Operations = Revenue from Operations – Cash Revenue from Operations
                                                    = 7,20,000 – 1,80,000
                                                    = Rs 5,40,000

Inventory Turnover Ratio = Credit Revenue from Operations/Average Trade Receivables
                                        = 5,40,000/90,000
                                        = 6 Times

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