question archive A company reports the following: Sales $4,560,000 Average accounts receivable (net) 380,000 Determine (a) the accounts receivable turnover and (b) the number of days' sales in receivables
A company reports the following: Sales $4,560,000 Average accounts receivable (net) 380,000 Determine (a) the accounts receivable turnover and (b) the number of days' sales in receivables
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A company reports the following: Sales $4,560,000 Average accounts receivable (net) 380,000 Determine (a) the accounts receivable turnover and (b) the number of days' sales in receivables. Round interim calculations to the nearest dollar and final answers to one decimal place. Assume a 365-day year. a. Accounts receivable turnover b. Number of days' sales in receivables days
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Answer:
a. 12 times
b. 30.42 days
Explanation:
Data provided in the question
Sales = $4,560,000
Average account receivable = $380,000
So, The computation is shown below:
a. Account receivable turnover ratio is
= Sales ÷ average account receivable (net)
= $4,560,000 ÷ $380,000
= 12 times
b. Now the number of days sales in receivable is
= Total number of days in a year ÷ account receivable turnover ratio
= 365 days ÷ 12 times
= 30.42 days
