Fraser Company had $130,000 in sales on account last year. The beginning accounts receivable balance was $10,000 and the ending accounts receivable balance was $14,000. The company's accounts receivable turnover was closest to

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Business

Jaydon

23 December, 23:54

Fraser Company had $130,000 in sales on account last year. The beginning accounts receivable balance was $10,000 and the ending accounts receivable balance was $14,000. The company's accounts receivable turnover was closest to

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Aaron Solis · Answer 1

The company's accounts receivable turnover was closest to 10.83 times

Explanation:

The accounts receivable turnover is an efficiency ratio that measures how many times a company can collect its receivables or money owed by clients during the year.

Accounts receivable turnover is calculated by following formula:

Accounts Receivable Turnover = Net Credit Sales / Average Accounts Receivable

In there:

Average Accounts Receivable = (The beginning accounts receivable of the period balance + The ending accounts receivable of the period balance) / 2

In Fraser Company:

Average Accounts Receivable = ($10,000 + $14,000) / 2 = $12,000

Accounts Receivable Turnover = $130,000/$12,000 = 10.83 times