Accounting – 6.1 Calculation and understanding of accounting ratios | e-Consult
6.1 Calculation and understanding of accounting ratios (1 questions)
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Calculation:
Trade Receivables Turnover (Days) = (Average Credit Receivables / Credit Sales) x 365
We need to calculate the average credit receivables. Assuming the average is equal to the credit sales for simplicity.
Average Credit Receivables = £500,000
Trade Receivables Turnover (Days) = (£500,000 / £500,000) x 365
Trade Receivables Turnover (Days) = 1 x 365
Trade Receivables Turnover (Days) = 365 days
Answer: 365 days
Table:
| Cell |
| Credit Sales |
| Average Credit Receivables |
| Trade Receivables Turnover (Days) |