The formula to calculate receivables (debtors) turnover in times per annum is:
A) 365 divided by net sales
B) Net sales revenue divided by total assets
C) Net sales revenue divided by average receivables balance
D) Average receivables balance divided by net sales revenue

Question

Quizplus · Accepted Answer

The formula to calculate receivables (debtors) turnover in times per annum is to divide net sales revenue by the average receivables balance. This will give us the number of times the company collects its receivables (or how many times the balance turns over) in a year. Option A is incorrect because we don't divide 365 by net sales, and option B is incorrect as it doesn't involve receivables balance in the formula. Option D is incorrect as it divides net sales revenue by average receivables, which is the inverse of the correct formula.

The Formula to Calculate Receivables (Debtors) Turnover in Times Per