CA Inter P6 · Chapter 3 · Question 3 of 9
Annual credit sales of Kesar Foods Ltd are ₹ 36,00,000 and average trade receivables are ₹ 6,00,000. Assuming 360 days in a year, the average collection period is:
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: D) 60 days
Explanation
Receivables turnover = credit sales / average receivables = ₹ 36,00,000 / ₹ 6,00,000 = 6 times. Average collection period = 360 / 6 = 60 days. The figure 6 is the turnover ratio (in times), not days.
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