Net sales $1,200,000
Average accounts receivable (net) 100,000
Determine (a) the accounts receivable turnover and (b) the number of days’ sales in receivables. Round to one decimal place.
Answer:
a. Accounts Receivable Turnover = Net Sales ÷ Average Accounts Receivable
Accounts Receivable Turnover = $1,200,000 ÷ $100,000
Accounts Receivable Turnover = 12.0
b. Number of Days’ Sales in Receivables = Average Accounts Receivable
Average Daily Sales
Number of Days’ Sales in Receivables = $100,000 ÷ ($1,200,000 ÷ 365)
= $100,000 ÷ $3,288
Number of Days’ Sales in Receivables = 30.4 days