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Fundamentals of Financial Manageme...

15th Edition
Eugene F. Brigham + 1 other
ISBN: 9781337395250

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BuyFindarrow_forward

Fundamentals of Financial Manageme...

15th Edition
Eugene F. Brigham + 1 other
ISBN: 9781337395250
Textbook Problem

DAYS SALES OUTSTANDING Baxley Brothers has a DSO of 23 days, and its annual sales are $3,650,000. What is its accounts receivable balance? Assume that it uses a 365-day year.

Summary Introduction

To determine: Accounts receivable balance.

Introduction:

Days Sales Outstanding (DSO):

It is also known as the average collection period, it represents the time period a firm will take to collect its receivables. DSO is determined by dividing receivables to annual sales per day.

Explanation

Given,

Days sales outstanding (DSO) are 23 days.

Annual sales are $3,650,000.

Formula to calculate receivables,

Accounts receivable=Days sales outstanding×Annual sales365

Substitute 23 for days sales outstanding and $3,650,000 for annual sales in the above formula,

Accounts receivable=<

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