St.John's Inc.reported accounts receivable on January 1, 2013, of $500,000 and on December 31, 2013, of $550,000.Sales for the year were $4,000,000.What is their accounts receivable turnover ratio for the year?

Question

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Accounts receivable turnover ratio = Sales / Average accounts receivable
Average accounts receivable = (Beginning accounts receivable + Ending accounts receivable) / 2
Average accounts receivable = ($500,000 + $550,000) / 2 = $525,000
Accounts receivable turnover ratio = $4,000,000 / $525,000 = 7.6 times

StJohn's Inc