The financial records of Del Ltd reveal the following at 30 June 2016:
-If Del Ltd reduces the number of days' sales in receivables to 37.5,what will be the new accounts receivable turnover?

Question

The financial records of Del Ltd reveal the following at 30 June 2016:  
-If Del Ltd reduces the number of days' sales in receivables to 37.5,what will be the new accounts receivable turnover?

Quizplus · Accepted Answer

Accounts receivable turnover = Net credit sales / Average accounts receivable 
Current accounts receivable turnover = $6,250,000 / (($900,000+$850,000)/2) = 7.35 times p.a.

New accounts receivable = (37.5/365) x $6,250,000 = $644,863

New accounts receivable turnover = $6,250,000 / (($900,000 + $644,863)/2) = 9.7 times p.a.

The Financial Records of Del Ltd Reveal the Following at 30