Management Accounting - Debtors and Creditors Turnover Ratio

The debtor turnover ratio and creditors turnover ratio are measures of:

• Liquidity

• Solvency

• Profitability

• Efficiency

The debtor turnover ratio is calculated as:

• Total Credit Sales / Average Debtors

• Average Debtors / Total Credit Sales

• Total Debtors / Average Credit Sales

• Average Credit Sales / Total Debtors

The creditors turnover ratio is calculated as:

• Average Creditors / Total Credit Purchases

• Total Credit Purchases / Average Creditors

• Average Debtors / Total Credit Purchases

• Total Credit Purchases / Average Debtors

The creditors turnover ratio is used to measure:

• The average time taken by debtors to pay their debts

• The average time taken by creditors to pay their debts

• The profitability of a company

• The liquidity of a company

A company has Purchases of $1,46,000 and account payable of $1,10,000. What is its creditors turnover ratio?

• 0.2 times

• 1.327 times

• 5 times

• 10 times

A company has sales of $73,000 and Average accounts receivables of $11,000. What is its debtors turnover ratio?

• 0.2 times

• 2 times

• 6.636 times

• 10 time

Which of the following is used to calculate the average collection period of a company?

• Debtors turnover ratio

• Creditors turnover ratio

• Inventory turnover ratio

• None of the above

A company has a creditors turnover ratio of 4 times per year. What is the average payment period of the company?

• 45 days

• 60 days

• 91.25 days

• 120 days