Financial ratio analysis

hello, I am a CA PCC Student. I have a doubt in financial ratio analysis. I hope someone can help me here. My Doubt is

In the balancesheet as on 31.3.xx - Payables = 20000
In the Profit and Loss account for 31.3.xx - Credit Purchases = 240000

Now payables Turnover = 240000/20000 = 12
AVERAGE AGE of payables = 12/12 = 1

This means that it will be paid in 1 month or 30 days.

My Question is How can it be that the average age is 1 month or 30 days. For example 20000/30 = 666.67 Rs per day Purchase. Therefore
The First 666.67 Will be 30 days old
The Second 666.67 will be 29 days old
The third 666.67 will be 28 days old.....

and so on Until the last 666.67 will be 1 day old....

The average will come to 15 or so days and not 30 days. So why are we saying that the average age is 30 days? What is the Logic?



Replies (2)
u do 1 thing.. bhul jao apna logic n go with my logic.. u have taken 30 days so ie.30days*12months=360days 360*666.6666666666 n so on.. =239999.9999999999 n so on..which is equivalent to 240000..so tht was perfect.. so next time dont indulge urself in wasting others time..n urs too..gudluck.
please will you send the topic pertaining to finance and tax.

Leave a Reply

Your are not logged in . Please login to post replies

Click here to Login / Register  

Company
12 October 2026
AUDIT , ACCOUNTS AND TAXATION

KDSS

New Delhi

B.Com

View Details
Company
ARTICLESHIP 23 October 2026
CA Articleship / Article Assistant

M N Rao & Associates LLP

Vijayawada

CA Inter

View Details
Company
ARTICLESHIP 20 October 2026
CA ARTICLE

AMKN & CO

Noida

CA Inter

View Details
Company
ARTICLESHIP 07 October 2026
Article Assistant

Malhotra Rajesh & Associates

New Delhi

B.Com

View Details
Company
30 September 2026
Senior Accounts Executive

Codeboard Technology

Chennai

MBA

View Details
Company
ARTICLESHIP 22 October 2026
Articleship intern

Srinath Manikanta

Hyderabad

CA Inter

View Details
Company
ARTICLESHIP 23 October 2026
Articled Trainee

J Y & CO

Hyderabad

CA Inter

View Details
Company
06 October 2026
Assistant Manager - Audit and Compliance

Ravi K Jain & Co

Noida

Others

View Details