Assuming a 365 day year, Gore Industries calculated an average of 53 days to collect its accounts receivable in 2007. During 2007, Gore's accounts receivable turnover rate:
A) Was approximately 6.89.
B) Was equal to 53 times its average accounts receivable.
C) Was approximately 0.15.
D) Can't be determined from this information alone.

Question

Quizplus · Accepted Answer

The accounts receivable turnover rate is calculated by dividing the total credit sales by the average accounts receivable. We don't have the total credit sales, but we have the average collection period (53 days), and assuming a 365-day year, we can calculate the average accounts receivable turnover rate as follows:

365 days / 53 days = 6.89

Therefore, the answer is A, approximately 6.89.

Assuming a 365 Day Year, Gore Industries Calculated an Average