Business – 10.2 Analysis of published accounts – Financial efficiency ratios | e-Consult
10.2 Analysis of published accounts – Financial efficiency ratios (1 questions)
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Answer to Question 1
Step‑by‑step calculation:
| Item | Value (£) |
| Opening trade receivables | 60,000 |
| Closing trade receivables | 84,000 |
| Average trade receivables | (60,000 + 84,000) ÷ 2 = 72,000 |
1. Average trade receivables = £72,000.
2. Trade receivables turnover ratio = Credit sales ÷ Average trade receivables = £480,000 ÷ £72,000 = 6.67 times per year.
3. Turnover in days = 365 ÷ Turnover ratio = 365 ÷ 6.67 ≈ 55 days.