Jessica’s Sports Wear has $38,100 in receivables and $523,700 in total assets.The total asset turnover rate is 1.17 and the profit margin is 7.3 percent.How long on average does it take to collect the receivables? Assume a 365-day year.
A)26.91 days
B)19.45 days
C)11.68 days
D)31.07 days
E)22.70 days

Question

Jessica&#8217;s Sports Wear has $38,100 in receivables and $523,700 in total assets.The total asset turnover rate is 1.17 and the profit margin is 7.3 percent.How long on average does it take to collect the receivables? Assume a 365-day year.
A)26.91 days
B)19.45 days
C)11.68 days
D)31.07 days
E)22.70 days

Quizplus · Accepted Answer

The receivables turnover ratio is calculated as (Total Asset Turnover * Total Assets) / Receivables. Then, the average collection period is 365 divided by the receivables turnover ratio.

Jessica’s Sports Wear Has $38,100 in Receivables and $523,700 in Total