1. Debtors velocity = 3 months Sales = ₹ 25,00,000
Bills receivable & Bills payable were ₹ 60,000 and ₹ 36,667 respectively.
Sundry debtors =?

2. Credit rating is a study of the credit standing of a customer i.e. 5 C’s. Which of the following correctly describes those 5 C’s?

3. XYZ Ltd. has credit sales amounting to ₹ 32,00,000. The sale price per unit is ₹ 40, the variable cost is ₹ 25 while the average cost is ₹ 32. The average age of receivables of the firm is 72 days. The firm is considering tightening the credit standards. It will result in a fall in sales to ₹ 28,00,000, and the average age of receivables to 45 days. Assume 20% of return. The proposed policy will yield –
1 Year = 360 days and debtors are calculated on cost.

4. Which one of the following would help to reduce the number of accounts receivable delinquencies?

5. H Ltd. has current sales of ₹ 20,00,000. It is planning to introduce a discount policy of 2/10, Net 30. As a result, the Company expects the average collection period to go down by 10 days and 80% of the sales opt for cash discount facility. The required return on investment is 20%, should it introduce the new discount policy?

6. Total sales of LMN Ltd. are ₹ 31,248 out of which 25% are cash sales. The closing balance of debtors is ₹ 9,468. Debtors velocity =?

7. In___type of factoring the bank/factor takes all the risk and bears all the loss in case of debts becoming bad debts.

8. K Ltd. had sales last year of ₹ 26,50,000, including cash sales of ₹ 2,50,000. If its average collection period was 36 days, its ending accounts receivable balance is closest to
(Assume a 365 day year.)

9. Which of the following tool may be used to determine the degree of risk associated with cash collections?
A. Standard deviation
B. Co-efficient of variation
Select the correct answer from the options given below:

10. An exercise of credit rating involves –

11. A decrease in the firm’s receivables turnover ratio means that –

12. Which of the following sentence describes a correct strategy for the proper administration of receivables?

13. A firm has current sales of ₹ 2,56,48,750. It is considering the relaxation in its credit policy. The proposed terms of credit will be 60 days credit against the present policy of 45 days. As a result, the bad debts will increase from 1.5% to 2% of sales. The firm’s sales are expected to increase by 10%. Variable operating costs are 72% of sales. The firm’s corporate tax rate is 35%, and it requires an after-tax return of 15%. Should the firm change its credit period?
Note: Yes calculates its debtor on sales.

14. The cash discount is given to customers for:

15. Romaji Ltd. has sales of ₹ 1,18,00,000 and its debtor turnover ratio is 4:2. The cost of goods sold is ₹ 82,60,000. Debtors =?

16. The sales Manager of AB Ltd. suggests that if the credit period is given for 1.5 months then sales may likely increase by ₹ 1,20,000 per annum. The cost of sales amounted to 90% of sales. The risk of non-payment is 5%. The income tax rate is 30%. The expected return on investment is 13,375 (aftertax). Should the company change its credit policy?

17. ___ is an arrangement to have debts collected by a third party entity for a fee.

18. The payment terms 2/10, Net 30 tell us that:

19. Which of the following may be a reason why you would choose a policy with a higher Average Collection S Period (ACP)?

20. Which of the following function is required to be performed by the finance manager in relation to proper management of receivables?

21. A firm has current sales of ₹ 25,48,000. The firm has an unutilized capacity. In order to boost its sales, it is considering the relaxation in its credit policy. The proposed terms of credit will be 60 days credit against the present policy of 45 days. As a result, debtors (calculated on sales) will be –

22. ____ may also be offered for the early payment of dues.

23. Risk of non-payment may due to –

24. X Ltd. cash sales and credit sales are ₹ 5,67,500 & ? 87,50,000 respectively. Cost of goods sold is ₹ 61,25,000. Debtors are ₹ 8,20,833 and bills receivable are ? 2,00,000.
Debtors turnover ratio =?

25. Selling accounts receivable to a third party at a reduced price is part of the collection process known as –