*
These ratios calculated with the help of items of both Profit and Loss and Balance Sheet.
*

*
*

*
Example
*

*
Debtor Turnover Ratio=
*

*
Net Sales/Debtors
*

*
*

*
Example 1
*

*
Suppose Company has a Sales of 140 lacs
*

*
Sales Return=20 lacs
*

*
It has debtors of 30 lacs
*

*
What is Debtor Turnover Ratio?
*

Net Sales=140-20 =120lacs

Debtors=30 lacs

Debtor Turnover Ratio=

Net Sales/Debtors

=120/30

=4

-ea-

*
Example 1 Continued
*

*
What is Debtor Collection Period in this Case
*

Debtor Collection Period=

360/ Debtor Turnover Ratio =360/4=90

Debtor Collection Period (in months)=

12/ Debtor Turnover Ratio =12/4=3 month

Solve all your doubts with Teachoo Black (new monthly pack available now!)