The financial statements of Pomegranate Produce contained the following information: The average length of time it takes for Pomegranate Produce to collect accounts receivable is approximately:

Question

The financial statements of Pomegranate Produce contained the following information:  The average length of time it takes for Pomegranate Produce to collect accounts receivable is approximately:

Quizplus · Accepted Answer

Receivables turnover ratio = Net Sales Revenue ÷ Average Accounts Receivable
= $1,000,000 ÷ [($200,000 + $120,000)÷ 2] = 6.25 times
Days to collect = 365 ÷ Receivables turnover ratio
= 365 ÷ 6.25 = 58.4 days

The Financial Statements of Pomegranate Produce Contained the Following Information