Accounts Receivable Analysis
The company reports the following:
Sales: $1,092,080
Average accounts receivable (net): $49,640
Determine (a) the accounts receivable turnover and (b) the number of days' sales in receivables. Round interim calculations to the nearest dollar and final answers to one decimal place. Assume a 365-day year.
(a) Accounts receivable turnover:
Accounts receivable turnover = Sales / Average accounts receivable (net)
Accounts receivable turnover = $1,092,080 / $49,640
(b) Number of days' sales in receivables:
Number of days' sales in receivables = 365 / Accounts receivable turnover