The correct answer is: A. Total Sales
The average balance of debtors is the average amount of money that a company is owed by its customers. It is calculated by dividing the total amount of receivables by the number of days in the period.
If the average balance of debtors has increased, it means that the company is taking longer to collect its receivables. This could be due to a number of factors, such as a slowdown in sales, an increase in bad debts, or a change in the company’s credit policy.
Total sales is the total amount of revenue that a company generates from its sales activities. It is calculated by multiplying the number of units sold by the average selling price.
Total sales can be affected by a number of factors, including the company’s product mix, the prices it charges, and the volume of sales it generates. However, the average balance of debtors is not one of these factors.
Therefore, if the average balance of debtors has increased, total sales might not show a change in general.
Here are some additional details about each of the options:
- Option B: Average Payables is the average amount of money that a company owes its suppliers. It is calculated by dividing the total amount of payables by the number of days in the period.
- Option C: Current Ratio is a measure of a company’s liquidity. It is calculated by dividing the company’s current assets by its current liabilities.
- Option D: Bad Debt Loss is the amount of money that a company writes off as uncollectible. It is calculated by multiplying the company’s bad debt expense by the percentage of sales that are uncollectible.