Your company has net sales of $468,300 and average trade receivables of $111,500 for the year.Which of the following is true?
A)The receivables turnover ratio is 4.2 and the days-to-collect is 0.012.
B)The receivables turnover ratio is .24 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 .24 and the days-to-collect is 87.6.

Question

Quizplus · Accepted Answer

Receivables turnover ratio = Net sales / Average trade receivables
= $468,300 / $111,500
= 4.2
Days-to-collect = 365 days / Receivables turnover ratio
= 365 / 4.2
= 86.9
Therefore, the correct option is C - The receivables turnover ratio is 4.2 and the days-to-collect is 86.9.

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