A company has an average collection period of 52 days and accounts receivables of $250,000. What are the company's annual sales?

Question

Quizplus · Accepted Answer

The average collection period is calculated as (Accounts Receivable / Annual Sales) * 365. Rearranging for Annual Sales gives Annual Sales = (Accounts Receivable / Average Collection Period) * 365. Plugging in the numbers: ($250,000 / 52) * 365 = $1,754,808.

A Company Has an Average Collection Period of 52 Days