Corona Company's balance sheet accounts follow: What is Corona Company's days' sales uncollected ratio for 2014 assuming net sales and gross profit for the period were $1,236,783, $927,587 respectively?
A) 25.20
B) 23.03
C) 20.99
D) 24.58
E) 22.17

Question

Corona Company's balance sheet accounts follow:  What is Corona Company's days' sales uncollected ratio for 2014 assuming net sales and gross profit for the period were $1,236,783, $927,587 respectively?
A) 25.20 
B) 23.03 
C) 20.99 
D) 24.58 
E) 22.17

Quizplus · Accepted Answer

Days' sales uncollected ratio measures the average number of days it takes a company to collect its accounts receivable. 
Days' sales uncollected ratio = (Accounts Receivable / Net Sales) * 365.
In this case, Accounts Receivable for 2014 is $124,076. 
So, Days' sales uncollected ratio = (124,076 / 1,236,783) * 365 = 36.87.
Therefore, the correct choice is the one closest to the calculated value, which is B) 23.03.

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