Last year, Bizmart had credit sales of $32 million and a net profit margin of 8%. If Bizmart had accounts receivable of $4.5 million, what was the length of the receivables conversion period?
A) 51.3 days
B) 56.3 days
C) 54.9 days
D) 47.2 days

Question

Quizplus · Accepted Answer

The receivables conversion period is calculated by dividing the accounts receivable by the average daily sales. First, calculate the daily sales: $32 million in sales / 365 days = $87,671.23 in daily sales. Then, divide the accounts receivable by the daily sales: $4.5 million / $87,671.23 = 51.3 days.

Last Year, Bizmart Had Credit Sales of $32 Million and a Net