Compute the receivables turnover ratio using the following information:

Net credit sales is $200,000 for year 2.

Total assets at the end of years 1 and 2 were $800,000 and $1,200,000, respectively.

Accounts receivable at the end of years 1 and 2 were $40,000 and $60,000, respectively.

Question

Business

Cameron Ingram

15 September, 08:38

Compute the receivables turnover ratio using the following information:

Net credit sales is $200,000 for year 2.

Total assets at the end of years 1 and 2 were $800,000 and $1,200,000, respectively.

Accounts receivable at the end of years 1 and 2 were $40,000 and $60,000, respectively.

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Answers (1)

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Kolten Caldwell · Answer 1

Receivables Turnover Ratio is 4

Explanation:

Computation of Average Receivables

Opening Receivables $ 40,000

Ending receivables $ 60,000

$ 100,000

Average receivables $ 50,000

Net Credit Sales $ 200,000

The Receivables Turnover ratio is calculated by dividing the Net Credit Sales by the Average Receivables.

Receivables Turnover Ratio = Net Credit Sales / Average Receivables

$ 200,000 / $ 50,000 = 4

Compute the receivables turnover ratio using the following information:Net credit sales is $200,000 for year 2.Total assets at the end of years 1 and 2 were $800,000 and $1,200,000, respectively.Accounts receivable at the end of years 1 and 2 were $40,000 and $60,000, respectively.

Compute the receivables turnover ratio using the following information:

Net credit sales is $200,000 for year 2.

Total assets at the end of years 1 and 2 were $800,000 and $1,200,000, respectively.

Accounts receivable at the end of years 1 and 2 were $40,000 and $60,000, respectively.