The accounts of Falcon, a limited liability company, as at 31 December include the items shown below:

Turnover for the year amounted to $450,000, including cash sales of $50,000.

20X6 20X5
$ $
Trade receivables 90 60


What is the receivables turnover period in days, using average trade receivables?

a) 68
b) 60
c) 73
d) 82
Correct answer A) 68 WHYYYYYY?????? I

Is it complete question?

Well to me it was a very easy question!
Actually you did not give the right information contained in the question. The opening and closing debtors are $60000 and $90000(not$ 60 and $ 90)!
Firstly calculate the average debtors: Avg. debtors= (60000+90000)/2
=$75000
Next, divide only credit sales by average debtors(as the formula for recievables turnover says)

=(450000-50000)/75000
=5.333 times (a year)
Now divide 360 by this figure to calculate figure in days!
=360/5.333
=67.54 days
~68 days (approx., round of to nearest number)
U see it was so simple!!!!
If u still have any questions, then plz ask. Thanx .bye! :)

I arrived at the same answer by a different route.

same as before (60+90)/2 = 75 average debtor amount.


credit sales (450-50) = 400k

Therefore debtor days = debtors/total credit sales x 365
= 75/400 x 365 = 68.43