Efficiency ratio: If Randolph Company has accounts receivables of $654,803 and net sales of $1,932,349, what is its accounts receivable turnover?
A) 0.34 times
B) 1.78 times
C) 2.95 times
D) None of the above

Question

Quizplus · Accepted Answer

Accounts receivable turnover ratio = Net sales / Average accounts receivable
Average accounts receivable = (Opening accounts receivable + Closing accounts receivable) / 2
Since we only have the closing accounts receivable, we assume that it is roughly equal to the average accounts receivable.
Therefore, accounts receivable turnover = $1,932,349 / $654,803 = 2.95 times. 
Therefore, the correct answer is C.

Efficiency Ratio: If Randolph Company Has Accounts Receivables of $654,803