Receivable collection 60 days, outstanding amount end of 2013 £567300.How much was purchased in 2013

gabriellenlewis

please explain! Thanks

Yalda20

Hi,
I have not come across this type of question. I think you will need to re-arrange the trade receivables collection period days. I think you are looking to find the trade r figure.

The formula is= Trade R/Sales*365=no of days

60 days/365*567,300=93,254.79 (2 d.p.). Can you please confirm that this is the correct answer?

and if you do 93,254.79/567,300*365=59.99 so the nearest day it will be 60 days which I think is correct.

Thank you.

NeilH

I believe the answer is £3,451,075

The formula for receivables collection or payables payment days is basically the same, but you use receivables and sales figures or payables and purchases figures.

For receivable days you use OUTSTANDING RECEIVABLES BALANCE / SALES x 365 = COLLECTION PERIOD (days)

For payables days you use OUTSTANDING PAYABLES BALANCE / PURCHASES x 365 = COLLECTION PERIOD (days)


In this case the formula is: £567,300 / ???? x 365 = 60 days, we need to solve????

So, rearrange and work backwards: (60/365) = 0.1644 (rounded here), so £567,300 / ???? = 0.1644, rearrange to £567,300 / 0.1644 = £3,451,075 (don't actually round until the end)