Fargo, Inc. disclosed the following information as of and for the year ended December 31, 2015: $$\begin{array} { l r }
\text { Net cash sales } & 600,000 \
\text { Net credit sales } & 960,000 \
\text { Inventory at beginning } & 100,000 \
\text { Inventory at end } & 150,000 \
\text { Net income } & 30,000 \
\text { Accounts receivable at beginning of year } & 110,000 \
\text { Accounts receivable at end of year } & 130,000
\end{array}$$ Fargo's receivables turnover is
A) 7.4 to 1.
B) 8.0 to 1.
C) 12.0 to 1.
D) 13.0 to 1.

Question

Fargo, Inc. disclosed the following information as of and for the year ended December 31, 2015: $$\begin{array} { l r } 
\text { Net cash sales } & 600,000 \
\text { Net credit sales } & 960,000 \
\text { Inventory at beginning } & 100,000 \
\text { Inventory at end } & 150,000 \
\text { Net income } & 30,000 \
\text { Accounts receivable at beginning of year } & 110,000 \
\text { Accounts receivable at end of year } & 130,000
\end{array}$$ Fargo's receivables turnover is
A) 7.4 to 1.
B) 8.0 to 1.
C) 12.0 to 1.
D) 13.0 to 1.

Quizplus · Accepted Answer

The receivables turnover ratio is calculated as Net Credit Sales / Average Accounts Receivable. Here, Net Credit Sales = $960,000, Average Accounts Receivable = ($110,000 + $130,000) / 2 = $120,000. Thus, Receivables Turnover = $960,000 / $120,000 = 8.0 to 1.

Fargo, Inc Fargo's Receivables Turnover Is A) 7

Fargo, Inc Fargo's Receivables Turnover Is
A) 7