The following information relates to RAM Corporation:

$\begin{array} { l c }
\text { Accounts receivable } & \$ 160,000 \
\text { Total credit sales } & \$ 2,500,000 \
\text { Accounts payable } & \$ 220,000
\end{array}$

What is RAM's receivables collection period (DSO)? In your computations, assume there are 360 days in a year.

Question

The following information relates to RAM Corporation:

$\begin{array} { l c } 
\text { Accounts receivable } & \$ 160,000 \
\text { Total credit sales } & \$ 2,500,000 \
\text { Accounts payable } & \$ 220,000
\end{array}$

What is RAM's receivables collection period (DSO)? In your computations, assume there are 360 days in a year.

Quizplus · Accepted Answer

The receivables collection period (DSO) is calculated as: $ \text{DSO} = \frac{\text{Accounts Receivable}}{\text{Total Credit Sales}} \times 360 $. Plugging in the given values: $ \text{DSO} = \frac{160,000}{2,500,000} \times 360 = 23.04 $ days.

The Following Information Relates to RAM Corporation What Is RAM's Receivables Collection Period (DSO)? in Your Computations