Chapter 4, Problem 1P

### Fundamentals of Financial Manageme...

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

Chapter
Section

### 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,

AccountsĀ receivable=DaysĀ salesĀ outstandingĆAnnualĀ sales365

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

AccountsĀ receivable=<

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