Answered: What is the receivables turnover?

Principles of Accounting Volume 1

19th Edition

ISBN:9781947172685

Author:OpenStax

Publisher:OpenStax

Chapter9: Accounting For Receivables

Section: Chapter Questions

Problem 12MC: South Rims has an accounts receivable balance at the end of 2018 of $357,470. The net credit sales...

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trout lumber Yard has a current accounts receivable balance of $442016. Credit sales for the year just ended were $9358610

a. What is the receivables turnover?

b. What is the day's receivables?

c. How long did it take on average for credit customers to pay off their accounts during the past year?

a. Receivables turnover _____ times

b. Days sales in receivables ____ days

c. Average collection period_____ days

Expert Solution

Step 1

Turnover means the is the amount of sales by the business. It is sometimes called as income of the business. It is a measure used for measuring the earnings of the business.

$R e c e i v a b l e s t u r n o v e r = \frac{A c c o u n t s r e c e i v a b l e s}{s a l e s} \times 100$
$D a y s r e c e i v a b l e = \frac{r e c e i v a b l e s}{s a l e s} \times 365$

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