Your company has net sales of $468,300 and average trade receivables of $111,500 for the year.Which of the following is true? (Round all calculations to one decimal place. )
A)The receivables turnover ratio is 4.2 and the days-to-collect is 0.01.
B)The receivables turnover ratio is .2 and the days-to-collect is 1,520.
C)The receivables turnover ratio is 4.2 and the days-to-collect is 86.9.
D)The receivables turnover ratio is .2 and the days-to-collect is 87.6.

Question

Quizplus · Accepted Answer

Receivables turnover ratio = Net Credit Sales / Average Trade Receivables
Receivables turnover ratio = $468,300 / $111,500 = 4.2
Days-to-collect = 365 / Receivables turnover ratio
Days-to-collect = 365 / 4.2 = 86.9
Therefore, the correct choice is C, as it accurately reflects the receivables turnover ratio and days-to-collect.

Your Company Has Net Sales of $468,300 and Average Trade