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Flying Tigers, Inc, has net sales of $719,000 and account receivables of $158,000. What is the...

Question:

Flying Tigers, Inc, has net sales of $719,000 and account receivables of $158,000. What is the firm's account receivable turnover?

Receivable Turnover:

Accounts receivable represent the current asset of the company as it indicates the amount that the company has to receive from its customers for making them credit sales. The number of times in a fiscal year, that a company collects cash from its receivables is termed as receivables turnover. The ratio is computed by dividing the annual credit sales with the average or ending receivables balance.

Answer and Explanation:


Answer:

Flying Tigers Inc's accounts receivable turnover is 4.55 times.

Explanation:

Flying Tigers Inc. has provided the following data:

  • Net sales = $719,000
  • Accounts receivable = $158,000

Computation:

  • Accounts receivable turnover = Annual net sales / Accounts receivable
  • Accounts receivable turnover = $719,000 / $158,000
  • Accounts receivable turnover = 4.55 times

Learn more about this topic:

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Accounts Receivable: Definition, Process & Examples

from Accounting 101: Financial Accounting

Chapter 7 / Lesson 1
70K

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