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A company has net sales of $624,000 and average accounts receivable of $160,000. What is its...

Question:

A company has net sales of $624,000 and average accounts receivable of $160,000. What is its accounts receivable turnover for the period?

Financial ratios

Financial ratios are indicators of a financial performance of a company. Common ratios are return on sales, return on assets, asset turnover and debt to equity ratio.

Answer and Explanation:

Accounts receivable turnover is computed as follows:

Accounts receivable turnover = Net sales / Average accounts receivable

Accounts receivable turnover = $624,000 / $160,000

Accounts receivable turnover = 3.9


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Commonly Used Financial Ratios

from Accounting 101: Financial Accounting

Chapter 13 / Lesson 6
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