Bevington Studio reported the following income statement and balance sheet amounts on December 31, 2007.
Inventory and prepaid expenses account for $20,000 of the 2007 current assets.
Average inventory for 2007 is $15,000.
Average net accounts receivable for 2007 is $30,000.
Average one-day sales are $3,150.
There are 7,000 shares of common stock outstanding.
Total dividends paid during 2007 were $140,000.
The market price per share of common stock is $21.
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What is the company's days' sale in receivables?

Question

Bevington Studio reported the following income statement and balance sheet amounts on December 31, 2007.
 Inventory and prepaid expenses account for $20,000 of the 2007 current assets.
Average inventory for 2007 is $15,000.
Average net accounts receivable for 2007 is $30,000.
Average one-day sales are $3,150.
There are 7,000 shares of common stock outstanding.
Total dividends paid during 2007 were $140,000.
The market price per share of common stock is $21.
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What is the company's days' sale in receivables?

Quizplus · Accepted Answer

Days' sale in receivables is calculated as (Accounts Receivable / Sales) * 365. The correct calculation leads to 9.52 days, indicating how long it takes on average for the company to collect its receivables.

Bevington Studio Reported the Following Income Statement and Balance Sheet