Assuming a 365 day year,Bush Industries calculated an average of 47 days to collect its accounts receivable in 2015.During 2015,Bush's accounts receivable turnover rate:
A)Was approximately 7.77.
B)Was equal to 47 times its average accounts receivable.
C)Was approximately 0.13.
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 information, but we do have the average collection period, which is the average number of days it takes to collect accounts receivable. To convert the average collection period to the accounts receivable turnover rate, we divide 365 (the number of days in a year) by the average collection period:

365 / 47 = 7.77

Therefore, the answer is choice A.

Assuming a 365 Day Year,Bush Industries Calculated an Average of 47