A company has a receivables turnover ratio of 10. The average gross receivables during the period are $ 400,000. What is the amount of net credit sales for the period?
A) $ 40,000
B) $ 4,000,000
C) $ 480,000
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 gross receivables. Given the ratio is 10 and average receivables are $400,000, net credit sales = 10 * $400,000 = $4,000,000.

A Company Has a Receivables Turnover Ratio of 10