Tops, Inc. has sales of $705,000. The cost of goods sold is equal to 60% of sales. The beginning accounts receivable balance is $33,000 and the ending accounts receivable balance is $36,000. How long on average does it take the firm to collect its receivables?

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The average accounts receivable is ($33,000 + $36,000) / 2 = $34,500. The accounts receivable turnover is $705,000 / $34,500 = 20.43. The average collection period is 365 / 20.43 = 17.86 days.

Tops, Inc Has Sales of $705,000