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Credit Sales Rs 15000 lakhs, Variable Cost of Sales 80%,Selling Price Rs 300 per unit, Average Cost per unit Rs 270 per unit. Required Rate of Return 18%.Debtors Turnover Ratio 8. Calculate Opportunity Cost of Average Investments in Receivables. (Take 360 days in a yea?
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Credit Sales Rs 15000 lakhs, Variable Cost of Sales 80%,Selling Price ...
Opportunity Cost of Average Investments in Receivables
To calculate the opportunity cost of average investments in receivables, we need to consider the debtors turnover ratio and the required rate of return.
Debtors Turnover Ratio:
Debtors turnover ratio is a financial ratio that indicates the number of times average debtors are turned over during a year. It is calculated as follows:
Debtors Turnover Ratio = Credit Sales / Average Debtors
In this case, the debtors turnover ratio is given as 8.
Average Debtors:
To calculate the average debtors, we need to divide the credit sales by the debtors turnover ratio.
Average Debtors = Credit Sales / Debtors Turnover Ratio
= 15000 lakhs / 8
= 1875 lakhs
Opportunity Cost:
The opportunity cost is the return that could have been earned by investing the same amount of money in an alternative investment. In this case, the opportunity cost is the return that could have been earned by investing the average investments in receivables in an alternative investment with the required rate of return.
The formula to calculate the opportunity cost is as follows:
Opportunity Cost = Average Debtors * Required Rate of Return / 360
In this case, the required rate of return is given as 18%.
Opportunity Cost = 1875 lakhs * 18% / 360
= 93.75 lakhs
Therefore, the opportunity cost of average investments in receivables is 93.75 lakhs.
To calculate the opportunity cost of average investments in receivables, we need to consider the debtors turnover ratio and the required rate of return.
Debtors Turnover Ratio:
Debtors turnover ratio is a financial ratio that indicates the number of times average debtors are turned over during a year. It is calculated as follows:
Debtors Turnover Ratio = Credit Sales / Average Debtors
In this case, the debtors turnover ratio is given as 8.
Average Debtors:
To calculate the average debtors, we need to divide the credit sales by the debtors turnover ratio.
Average Debtors = Credit Sales / Debtors Turnover Ratio
= 15000 lakhs / 8
= 1875 lakhs
Opportunity Cost:
The opportunity cost is the return that could have been earned by investing the same amount of money in an alternative investment. In this case, the opportunity cost is the return that could have been earned by investing the average investments in receivables in an alternative investment with the required rate of return.
The formula to calculate the opportunity cost is as follows:
Opportunity Cost = Average Debtors * Required Rate of Return / 360
In this case, the required rate of return is given as 18%.
Opportunity Cost = 1875 lakhs * 18% / 360
= 93.75 lakhs
Therefore, the opportunity cost of average investments in receivables is 93.75 lakhs.
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Credit Sales Rs 15000 lakhs, Variable Cost of Sales 80%,Selling Price Rs 300 per unit, Average Cost per unit Rs 270 per unit. Required Rate of Return 18%.Debtors Turnover Ratio 8. Calculate Opportunity Cost of Average Investments in Receivables. (Take 360 days in a yea?
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Credit Sales Rs 15000 lakhs, Variable Cost of Sales 80%,Selling Price Rs 300 per unit, Average Cost per unit Rs 270 per unit. Required Rate of Return 18%.Debtors Turnover Ratio 8. Calculate Opportunity Cost of Average Investments in Receivables. (Take 360 days in a yea? for B Com 2024 is part of B Com preparation. The Question and answers have been prepared according to the B Com exam syllabus. Information about Credit Sales Rs 15000 lakhs, Variable Cost of Sales 80%,Selling Price Rs 300 per unit, Average Cost per unit Rs 270 per unit. Required Rate of Return 18%.Debtors Turnover Ratio 8. Calculate Opportunity Cost of Average Investments in Receivables. (Take 360 days in a yea? covers all topics & solutions for B Com 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Credit Sales Rs 15000 lakhs, Variable Cost of Sales 80%,Selling Price Rs 300 per unit, Average Cost per unit Rs 270 per unit. Required Rate of Return 18%.Debtors Turnover Ratio 8. Calculate Opportunity Cost of Average Investments in Receivables. (Take 360 days in a yea?.
Credit Sales Rs 15000 lakhs, Variable Cost of Sales 80%,Selling Price Rs 300 per unit, Average Cost per unit Rs 270 per unit. Required Rate of Return 18%.Debtors Turnover Ratio 8. Calculate Opportunity Cost of Average Investments in Receivables. (Take 360 days in a yea? for B Com 2024 is part of B Com preparation. The Question and answers have been prepared according to the B Com exam syllabus. Information about Credit Sales Rs 15000 lakhs, Variable Cost of Sales 80%,Selling Price Rs 300 per unit, Average Cost per unit Rs 270 per unit. Required Rate of Return 18%.Debtors Turnover Ratio 8. Calculate Opportunity Cost of Average Investments in Receivables. (Take 360 days in a yea? covers all topics & solutions for B Com 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Credit Sales Rs 15000 lakhs, Variable Cost of Sales 80%,Selling Price Rs 300 per unit, Average Cost per unit Rs 270 per unit. Required Rate of Return 18%.Debtors Turnover Ratio 8. Calculate Opportunity Cost of Average Investments in Receivables. (Take 360 days in a yea?.
Solutions for Credit Sales Rs 15000 lakhs, Variable Cost of Sales 80%,Selling Price Rs 300 per unit, Average Cost per unit Rs 270 per unit. Required Rate of Return 18%.Debtors Turnover Ratio 8. Calculate Opportunity Cost of Average Investments in Receivables. (Take 360 days in a yea? in English & in Hindi are available as part of our courses for B Com.
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