A company with net sales of $850,000,a beginning balance of net receivables of $230,000,and an ending balance of net receivables of $190,000 has a days' sales in receivables of:

Question

Quizplus · Accepted Answer

Days' sales in receivables measures how long it takes for a company to collect its accounts receivable. The formula for calculating days' sales in receivables is:

(Days in period * Net receivables) / Net sales

In this case, the days in the period is assumed to be 365 days.

Using the formula:

(365 * (($230,000 + $190,000) / 2)) / $850,000 = 90.14 days

Rounding to the nearest whole number gives us 90 days. So the company has a days' sales in receivables of 90 days.

A Company with Net Sales of $850,000,a Beginning Balance of Net