Kessler Cleaners has accounts receivable of $28,943,total assets of $387,600,cost of goods sold of $317,400,and a capital intensity ratio of .97.What is the accounts receivable turnover rate?
A)12.63
B)13.81
C)12.42
D)14.61
E)10.97

Question

Quizplus · Accepted Answer

First, we need to calculate the company's net sales:
Net Sales = Cost of Goods Sold / (1 - Capital Intensity Ratio)
Net Sales = $317,400 / (1 - 0.97) = $10,580,000

Next, we can calculate the accounts receivable turnover rate:
Accounts Receivable Turnover = Net Sales / Average Accounts Receivable
Average Accounts Receivable = (Beginning Accounts Receivable + Ending Accounts Receivable) / 2
Assuming we only have the ending accounts receivable of $28,943, we can use that as the average accounts receivable:
Accounts Receivable Turnover = $10,580,000 / $28,943 ≈ 13.81

Therefore, the answer is B.

Kessler Cleaners Has Accounts Receivable of $28,943,total Assets of $387,600,cost