Determine the debtors turnover ratio if, closing debtors is Rs. 40,000, cash sale is 25% of credit sales, and excess of closing debtors over opening debtors is Rs. 20,000.

The correct answer is A. 4 times.

The formula for debtors turnover ratio is:

Debtors turnover ratio = Credit sales / Average debtors

We know that cash sale is 25% of credit sales, so credit sales is 100% – 25% = 75% of total sales.

We also know that the excess of closing debtors over opening debtors is Rs. 20,000. This means that the average debtors is Rs. 20,000 / 2 = Rs. 10,000.

Therefore, the debtors turnover ratio is:

Debtors turnover ratio = 75% /

24.8 41.5 48.3 47.8C117.2 448 288 448 288 448s170.8 0 213.4-11.5c23.5-6.3 42-24.2 48.3-47.8 11.4-42.9 11.4-132.3 11.4-132.3s0-89.4-11.4-132.3zm-317.5 213.5V175.2l142.7 81.2-142.7 81.2z"/> Subscribe on YouTube