How is credit turnover calculated?

1. 6 times. B.
2. 4 times. C.
3. 2 times. D.
4. 5 times. Hard. Open in App. Solution. Verified by Toppr. Correct option is B) Average accounts payable = (Rs. 4,00,000 + Rs. 2,00,000)/2. = Rs. 3,00,000. Credit turnover ratio = Net credit purchases/Average accounts payable. = Rs. 12,00,000/Rs. 3,00,000. = 4 Times. Was this answer helpful?

What is turnover in bank account?

The word “Turnover” has many meanings. Here the turnover generally refers to the total credits in any given period in account holder’s account. While bank’s own turnover is the total loans disbursed + outstanding recovery of earlier period – bad debts (loans written off) in this period.

What is turnover in cash credit account?

“They (banks and financial institutions) are calculating the CC limit on the basis of turnover. By taking up digital transaction, the balance sheet of companies would be “clean” and MSMEs would get loans from banks. “Take your balance sheet.

How are AP turnover days calculated?

The accounts payable turnover in days shows the average number of days that a payable remains unpaid. To calculate the accounts payable turnover in days, simply divide 365 days by the payable turnover ratio. Therefore, over the fiscal year, the company takes approximately 60.53 days to pay its suppliers.

Is higher accounts payable turnover better?

Accounts payable turnover is the number of times a company pays off its vendor debts within a certain timeframe. Similar to most liquidity ratios, a high accounts payable turnover ratio is more desirable than a low AP turnover ratio because it indicates that a company quickly pays its debts.

Is turnover the same as income?

Turnover is the total sales made by a business in a certain period. It’s sometimes referred to as ‘gross revenue’ or ‘income’. This is different to profit, which is a measure of earnings.

How do you calculate payable turnover?

Accounts payable turnover rates are typically calculated by measuring the average number of days that an amount due to a creditor remains unpaid. Dividing that average number by 365 yields the accounts payable turnover ratio.