Trade receivables turnover: Class 12 practice
Trade receivables turnover = credit revenue from operations ÷ average trade receivables. Read the method, follow the three worked examples, then try the six questions.
What you should know first
- Averages
The idea behind trade receivables turnover
Trade receivables turnover = credit revenue from operations ÷ average trade receivables. Average collection period = 365 ÷ turnover (or 12 months ÷ turnover).
Step-by-step method
- Average receivables = (opening + closing)/2.
- Turnover = credit sales ÷ average receivables.
- Collection period = 365 ÷ turnover.
Worked example 1 (Basic)
Credit sales ₹3,75,000, opening receivables ₹1,00,000, closing ₹50,000. Find the receivables turnover.
- Average = ₹75,000
- 375000 ÷ 75000 = 5
- Answer: 5 times
Worked example 2 (Standard)
Receivables turnover is 5 times. Find the average collection period (365 days).
- 365 ÷ 5
- Answer: 73 days
Worked example 3 (Challenge)
Total sales ₹2,90,000 include cash sales ₹40,000. Average receivables ₹50,000. Find the turnover and collection period.
- Credit sales = ₹2,50,000
- Turnover = 5
- Period = 73 days
- Answer: 5 times, 73 days
Common mistakes and misconceptions
- Using total sales when only credit sales count
- Using closing receivables instead of the average
Practice questions
- (Basic) Credit sales ₹2,20,000, opening receivables ₹50,000, closing ₹60,000. Find the receivables turnover.
- (Basic) Credit sales ₹1,00,000, opening receivables ₹20,000, closing ₹20,000. Find the receivables turnover.
- (Standard) Receivables turnover is 10 times. Find the average collection period (365 days).
- (Standard) Receivables turnover is 6 times. Find the average collection period (365 days).
- (Challenge) Total sales ₹4,60,000 include cash sales ₹10,000. Average receivables ₹45,000. Find the turnover and collection period.
- (Challenge) Total sales ₹7,20,000 include cash sales ₹20,000. Average receivables ₹70,000. Find the turnover and collection period.
Answer key with full working
- Q1: Average = ₹55,000 → 220000 ÷ 55000 = 4 → Answer: 4 times
- Q2: Average = ₹20,000 → 100000 ÷ 20000 = 5 → Answer: 5 times
- Q3: 365 ÷ 10 → Answer: 36.5 days
- Q4: 365 ÷ 6 → Answer: 60.83 days
- Q5: Credit sales = ₹4,50,000 → Turnover = 10 → Period = 36.5 days → Answer: 10 times, 36.5 days
- Q6: Credit sales = ₹7,00,000 → Turnover = 10 → Period = 36.5 days → Answer: 10 times, 36.5 days
Syllabus note
This skill is listed under "Accounting Ratios" for Class 12 in the NCERT/CBSE books. ICSE, IGCSE, IB and state boards may teach it in a different chapter or year.
Answers on this page are generated and automatically re-checked by a second, independent calculation. They have not been reviewed by a teacher — if you spot a problem, tell us on WhatsApp.
Related practice and notes
- Current ratio and quick ratio
- Debt–equity ratio
- Inventory turnover ratio
- Gross profit and net profit ratios
- Working capital and its turnover
- Return on investment (capital employed)
- Interest on capital and drawings
- New and sacrificing ratio on admission
- Gaining ratio on retirement
- Valuation of goodwill
- All Class 12 practice
Frequently asked questions
Which chapter is trade receivables turnover in?
"Accounting Ratios", Class 12 Accountancy (NCERT/CBSE). Other boards may place it differently.
How were the answers checked?
Answers on this page are generated and automatically re-checked by a second, independent calculation. They have not been reviewed by a teacher — if you spot a problem, tell us on WhatsApp.