Final answer:
To find the Debtors Collection Period for Duffield Ltd, we calculate the sales revenue based on cost of sales and gross profit markup, derive the credit sales, and then analyze trade receivables against average daily credit sales. The resulting collection period is approximately 63.37 days.
Step-by-step explanation:
Calculating the Debtors Collection Period
In order to calculate Duffield Ltd's Debtor's collection period in days, we need to use the trade receivables (debtors) figure and the sales figure which we can estimate from the given cost of sales and markup information. We start by calculating the total sales revenue. Since the company marks up goods by 60% on cost, the sales revenue can be calculated as follows:
Sales Revenue = Cost of Sales + (Cost of Sales × Markup Percentage)
In this scenario:
Sales Revenue = R5,400 million + (R5,400 million × 0.60) = R5,400 million + R3,240 million = R8,640 million
Since 90% of total sales are on credit, credit sales would be:
Credit Sales = Sales Revenue × 90%
Credit Sales = R8,640 million × 0.90 = R7,776 million
To find the debtor's collection period, we divide the trade receivables by daily credit sales:
Daily Credit Sales = Credit Sales / 365 days
Daily Credit Sales = R7,776 million / 365 = R21.3 million/day (approx)
Finally, we calculate the debtor's collection period:
Debtors Collection Period = Trade Receivables / Daily Credit Sales
Debtors Collection Period = R1,350 million / R21.3 million/day = 63.38 days
When rounded to two decimal places, the collection period is 63.37 days, which corresponds to option C.