Belair Forton Limited recorded revenue of £2 266 380 in the 20X1 financial year, of which 47% was on credit.The average trade receivables figure over that period was £152 630. What was the trade receivables collection period in months (to one decimal place)?

Question

Quizplus · Accepted Answer

Trade receivables collection period = (Trade receivables / Credit sales per day) x 30
Credit sales per day = (revenue x % on credit sales) / 365
Credit sales per day = (2,266,380 x 0.47) / 365 = 2,922.83
Trade receivables collection period = (152,630 / 2,922.83) x 30 = 1.72 months (rounded to one decimal place)

Belair Forton Limited Recorded Revenue of £2 266 380 in the 20X1