SSS Ltd has provided the following information from its financial statements for the year ended 30 June 2018. $$\begin{array} { l r }
\text { Sales (all on credit) } & \$ 2,000,000 \
\text { Gross profit on sales } & 1,000,000 \
\text { Net profit } & 150,000 \
\text { Cost of sales } & 1,000,000 \
\text { Inventory at end of year } & 200,000 \
\text { Accounts receivable at end of year } & 500,000
\end{array}$$
-The company trades 365 days per year. The number of times SSS's accounts receivable turned over for 2018 is:
A)5.0 times.
B)1.8 times.
C)3.8 times.
D)4.0 times.

Question

SSS Ltd has provided the following information from its financial statements for the year ended 30 June 2018. $$\begin{array} { l r } 
\text { Sales (all on credit) } & \$ 2,000,000 \
\text { Gross profit on sales } & 1,000,000 \
\text { Net profit } & 150,000 \
\text { Cost of sales } & 1,000,000 \
\text { Inventory at end of year } & 200,000 \
\text { Accounts receivable at end of year } & 500,000
\end{array}$$ 
-The company trades 365 days per year. The number of times SSS's accounts receivable turned over for 2018 is:
A)5.0 times.
B)1.8 times.
C)3.8 times.
D)4.0 times.

Quizplus · Accepted Answer

Accounts receivable turnover is calculated as Sales divided by Accounts Receivable. For SSS Ltd, it is $2,000,000 / $500,000 = 4.0 times.

SSS Ltd Has Provided the Following Information from Its Financial