Calculate the value of Accounts Receivable, given the following information: $$\begin{array} { | l | c | }
\hline \text { Data: } & \
\hline \text { Average Inventory } & 7,000.00 \
\hline \text { Average AR } & ? \
\hline \text { Average AP } & 3,500.00 \
\hline \text { Sales } & 120,000.00 \
\hline \text { COGS } & 95,000.00 \
\hline \text { Cash Conversion Cycle } & 51.47 \
\hline \text { Inventory Period } & 26.89 \
\hline \text { Payables Period } & 13.45 \
\hline
\end{array}$$

Question

Calculate the value of Accounts Receivable, given the following information: $$\begin{array} { | l | c | } 
\hline \text { Data: } & \
\hline \text { Average Inventory } & 7,000.00 \
\hline \text { Average AR } & ? \
\hline \text { Average AP } & 3,500.00 \
\hline \text { Sales } & 120,000.00 \
\hline \text { COGS } & 95,000.00 \
\hline \text { Cash Conversion Cycle } & 51.47 \
\hline \text { Inventory Period } & 26.89 \
\hline \text { Payables Period } & 13.45 \
\hline
\end{array}$$

Quizplus · Accepted Answer

The Accounts Receivable Period can be calculated using the Cash Conversion Cycle formula: CCC = Inventory Period + Receivables Period - Payables Period. Solving for Receivables Period gives 51.47 = 26.89 + Receivables Period - 13.45, which results in a Receivables Period of 38.03 days. Using the formula for Receivables Turnover Ratio (Sales / Average AR) and solving for Average AR gives $12,500.

Calculate the Value of Accounts Receivable, Given the Following Information