Question

If a firm has $400,000 in credit sales and $80,000 in average accounts receivable, accounts receivable turnover is .

a) 5.32
b) 0.20
c) 48
d) None of the above

Answer 1

The accounts receivable turnover is 5. The correct answer is (a) 5.32 which is the closest value to 5.

Step-by-step explanation:

To calculate accounts receivable turnover, we divide credit sales by average accounts receivable. In this case, credit sales are $400,000 and average accounts receivable is $80,000. So, the accounts receivable turnover is $400,000 / $80,000 = 5. The correct answer is (a) 5.32 which is the closest value to 5.