XYZ's receivables turnover is 10x. The accounts receivable at year-end are $600,000. What was the sales figure for the year?

Question

Quizplus · Accepted Answer

The formula for receivables turnover is sales/average accounts receivable. Since the receivables turnover is 10x, we can calculate the average accounts receivable as $600,000/10 = $60,000. Using the same formula rearranged, we can solve for sales: sales = receivables turnover x average accounts receivable = 10 x $60,000 = $600,000. Therefore, the sales figure for the year was $6,000,000 (choice B).

XYZ's Receivables Turnover Is 10x