From the following information, calculate –
(i) Trade receivables turnover ratio
(ii) Average collection period
(iii) Trade rayable turnover ratio
(iv) Average payment period
Given :
`{:(,,(Rs.)),("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):}`

Explanation

(i) Trade Receivables Turnover Ratio `=("Net Credit Revenue from operation")/("Average Trade Receivable")`
`=(Rs. 8,75,000)/((Rs. 59,000 + Rs. 48,000))^(**)`
= 8.18 times
`**` This figure 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.
(ii) Average Collection Period `=(365)/("Trade Receivables Turnover Ratio")`
`=(365)/(8.18)`
45 days
(iii) Trade Payable Turnover Ratio `=("Purchases"^(**))/("Average Trade Payables")`
`=("Purchases")/("Creditors + Bills payable")`
`=(4,20,000)/(90,000 + 52,000)`
`=(4,20,000)/(1,42,000)`
= 2.96 times
(iv) Average Payment Period `=(365)/("Trade Payables Turnover Ratio")`
`=(365)/(2.96)`
= 123 days
`**` Since no information regarding credit purchase is given, hence it will be related as net purchases.