A company has a receivables turnover ratio of 12. The average gross accounts receivable during the period is $360,000. What is the amount of net credit sales for the period?
A) $432,000.
B) $3,000,000.
C) $4,320,000.
D) Cannot be determined from the information given.

Question

Quizplus · Accepted Answer

The receivables turnover ratio is calculated as net credit sales divided by average accounts receivable. Given the ratio is 12 and average accounts receivable is $360,000, net credit sales = 12 * $360,000 = $4,320,000.

A Company Has a Receivables Turnover Ratio of 12