Maloney Company had net credit sales during the year of ₤1,800,000 and cost of goods sold of ₤1,200,000. The balance in accounts receivable at the beginning of the year was ₤120,000, and the end of the year it was ₤180,000. What was the accounts receivable turnover ratio?

Question

Quizplus · Accepted Answer

Accounts Receivable Turnover Ratio = Net Credit Sales / Average Accounts Receivable
Average Accounts Receivable = (Beginning Accounts Receivable + Ending Accounts Receivable) / 2
Average Accounts Receivable = (₤120,000 + ₤180,000) / 2 = ₤150,000
Accounts Receivable Turnover Ratio = ₤1,800,000 / ₤150,000 = 12.0

Maloney Company Had Net Credit Sales During the Year of ₤1,800,000