South Rims has an accounts receivable balance at the end of...

South Rims has an accounts receivable balance at the end of 2018 of $\$ 357,470 .$ The net credit sales for the year are $\$ 769,346 .$ The balance at the end of 2017 was $\$ 325,300 .$ What is the accounts receivable turnover rate for 2018 (rounded to two decimal places)? A. 2.02 times B. 2.25 times C. 2.15 times D. 1.13 times

South Rims has an accounts receivable balance at the end of 2018 of $\$ 357,470 .$ The net credit sales for the year are $\$ 769,346 .$ The balance at the end of 2017 was $\$ 325,300 .$ What is the accounts receivable turnover rate for 2018 (rounded to two decimal places)?
A. 2.02 times
B. 2.25 times
C. 2.15 times
D. 1.13 times

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Key Concepts

Net Credit Sales

Net credit sales represent the total sales made on credit, minus any sales returns or allowances. This figure is used in the turnover calculation as it reflects the actual credit sales that the company expects to collect, excluding cash sales.

Average Accounts Receivable

Average accounts receivable is calculated by taking the sum of the accounts receivable balances at the beginning and end of a period and then dividing by two. This average is used to smooth out seasonal fluctuations and obtain a representative value for the period.

Accounts Receivable Turnover

This metric measures how efficiently a company collects its credit sales by comparing net credit sales to the average accounts receivable balance over a period. It provides insight into the effectiveness of the company’s credit policies and collection practices.

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