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Financial And Managerial Accounting

15th Edition
WARREN + 1 other
ISBN: 9781337902663

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BuyFindarrow_forward

Financial And Managerial Accounting

15th Edition
WARREN + 1 other
ISBN: 9781337902663
Textbook Problem

A company reports the following:

images

Determine (a) the accounts receivable turnover and (b) the number of days’ sales in receivables.

Round to one decimal place.

a.

To determine

Determine the accounts receivable turnover.

Explanation

Determine the accounts receivables turnover:

Accounts receivables turnover ratio is mainly used to evaluate the collection process efficiency. It helps the company to know the number of times the accounts receivable is collected in a particular time period. Main purpose of accounts receivable turnover ratio is to manage the working capital of the company. This ratio is determined by dividing credit sales and sales return.

Formula:

Accounts receivables turnover ratio}=Net credit salesAverage&

b.

To determine

Determine the number of days’ sales in receivables.

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