Answer :
The trade receivables turnover (in days) for the company is option C. 66.9 days. It indicates that, on average, it takes the company approximately 66.9 days to collect payment from its credit sales..
Trade receivables turnover is a financial metric used to measure the efficiency with which a company collects its accounts receivable. It indicates the average number of days it takes for a company to collect payment from its credit sales. To calculate the trade receivables turnover, we need to divide the net credit sales by the average accounts receivable balance.
In this case, the net credit sales can be calculated by multiplying the total revenue by the percentage of sales on credit. So, 70% of RM1,703,698 gives us RM1,192,588 (net credit sales).
To find the average accounts receivable balance, we need to consider the trade receivables at the beginning and end of the period. Since only the year-end trade receivables are provided (RM218,603), we can assume that there were no significant changes in the receivables balance throughout the year.
Hence, we can consider the year-end trade receivables as the average accounts receivable balance.
Now, we can calculate the trade receivables turnover by dividing the net credit sales (RM1,192,588) by the average accounts receivable balance (RM218,603). This gives us a turnover of approximately 5.45.
To convert the turnover into days, we divide 365 (number of days in a year) by the turnover. Thus, 365/5.45 equals approximately 66.9 days.
Therefore, Correct option is C.the trade receivables turnover (in days) for the company is 66.9 days.
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