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Closing Trade Receivables Rs. 4,00,000; Cash Sales being 25% of Credit Sales; Excess of Closing Trade Receivables over Opening Trade Receivables Rs. 2,00,000; Revenue from Operations, i.e., Revenue from Operations, i.e., Net Sales Rs. 15,00,000. Calculate Trade Receivables Turnover Ratio [(Hint:) 1.  Net Credit Sales = Total Sales − Cash Sales 2. Opening Trade Receivables = Closing Trade Receivables − Excess of Closing  Trade Receivables over Opening Trade Receivables.]

SOLUTION

Let Credit Sales bex
Cash Sales25% of Credit Sale
Cash Sales
Cash Sales		= x × 25 / 100
= 25x / 100
Total SalesCash Sales + Credit Sales
15,00,000= 25x / 100 + x
Or, 125x / 100= 15,00,000
Or, x= 15,00,000 × 100 / 125
 = 12,00,000
Opening Trade ReceivablesClosing Trade Receivables − 2,00,000
= 4,00,000 − 2,00,000
= 2,00,000
Average receivablesOpening Receivables  + Closing Receivables /2
Average receivables= 2,00,000 + 4,00,000 / 2
= 3,00,000
Trade Receivables Turnover RatioNet Credit Sales / Average Trade Receivables 
= 12,00,000 / 3,00,000
= 4

Therefore, Trades Receivable Turnover Ratio is 4 Times

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