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10 July, 22:58

The financial statements of Minnesota Mining and Manufacturing Company (3M) report net sales of $20.0 billion. Accounts receivable (net) are $2.7 billion at the beginning of the year and $2.8 billion at the end of the year Compute 3M's accounts receivable turnover. (Round answer to 1 decimal place, e. g. 2.5.) Accounts Receivable Turnover times Compute 3M's average collection period for accounts receivable in days. (Round answer to O decimal places, e. g. 50. Use 365 days for calculation.) Average Collection Period days

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  1. 11 July, 00:03
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    7.3 times and 50 days

    Explanation:

    The computation is shown below:

    As we know that

    Account receivable turnover ratio = Net sales : Average accounts receivable

    where,

    Net sales is $20 billion

    And, the Average accounts receivable would be

    = (Accounts receivable, beginning of year + Accounts receivable, end of year) : 2

    = ($2.7 billion + $2.8 billion) : 2

    = $2.75 billion

    So, the accounts receivable turnover ratio would be

    = $20 billion : $2.75 billion

    = 7.3 times

    Now the average collection period would be

    = Total number of days in a year : Accounts receivable turnover ratio

    =365 days : 7.3

    = 50 days
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