Question

Skysong, Inc. had net credit sales during the year of $1090600 and cost of goods sold of $604000. The balance in accounts receivable at the beginning of the year was $114000 and at the end of the year was $152000. What was the accounts receivable turnover? 8.2 6.9 5.0 10.2

Answer 1

8.2

Step-by-step explanation:

Accounts receivable turnover measure the average times the company received their receivable, It measure the efficiency of the company regarding collection from customers. Turnover will be higher if company has low ratio of receivables to sales value.

Average Receivable can be calculated as below

Average Receivable = (Accounts Receivable at the beginning of the year + Accounts Receivable at the end of the year) / 2 = ($114000 + $152000)/2 = $133,000

Net Sales = $1,090,600

Formula for Accounts receivable turnover is as follow

Accounts receivable turnover = Net Sales / Average Receivable

Accounts receivable turnover = $1,090,600 / $133,000 = 8.2 times