Ortny Industries has an accounts receivable turnover ratio of 4.3. If Ortny has an accounts receivable balance of $90,000, what is Ortny's average daily credit sales?
A) $387,000
B) $1,548
C) $1,060
D) $3,521

Question

Quizplus · Accepted Answer

The accounts receivable turnover ratio is calculated as net credit sales divided by average accounts receivable. To find the average daily credit sales, first calculate the annual credit sales: 4.3 (turnover ratio) * $90,000 (accounts receivable) = $387,000. Then, divide by 365 days to find the daily sales: $387,000 / 365 = $1,060.

Ortny Industries Has an Accounts Receivable Turnover Ratio of 4