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 a receivables turnover ratio of 10 and average gross receivables of $400,000, the net credit sales can be calculated as 10 * $400,000 = $4,000,000.

A Company Has a Receivables Turnover Ratio of 10