Net sales total $912,500. Beginning and ending accounts receivable are $73,000 and $ 67,000 respectively. Calculate days' sales in receivables.
a. 25 Days
b. 28 Days
c. 27 Days
d. 34 Days
What Is The Days' In Sales Receivables:
The Days' In Sales Receivables is a financial metric that can be calculated using the income statement and balance sheet. The Days' In Sales Receivables tells users of the financial statements the amount of time it takes to collect the average account receivable.
Answer and Explanation:
Accounts receivable turnover (ART) = Net sales / Average receivables
=912,500 / ((73,000 +67,000 )/2)
Days' sales in receivables = 365 / ART
=365 / 13.04
=28.0 days (rounded)
The answer is thus B.
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Learn more about this topic:
from Finance 101: Principles of FinanceChapter 19 / Lesson 1