Calculate trade receivables trunover ratio and average collection period:
Credit revenue from operations (Net Credit sales ) for the year is Rs 600000 and debtors and bills receivable at the year end were Rs 60000 and 40000 respectively.

Explanation

Trade Receivables Turnove Ratio
`=("Credit revenue from operations (net credit sales)")/("Average trade receivables (debtros +bills receivable)")`
`=(Rs 600000)/(Rs 60000+ Rs 40000)=(Rs 600000)/(Rs 100000)=6 Times`
Average collection period (months)=`("No of monthe in a year")/("Trade receivables Turnover Ratio")=(12)/(16) = 2` months
Average collection period (Days)=`("No of days in a year")/("Trade Receivables Turnove Ratio")`
`=(365)/(6)=60.83` or 31 days