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31 October, 10:38

Net credit sales for Winner Company are $100,000 for the year. The Accounts Receivable account had a balance of $15,000 at the beginning of the year and $25,000 at the end of the year. What is the company's receivables turnover ratio?

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  1. 31 October, 11:02
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    Receivables turnover ratio = 5

    Explanation:

    Receivables turnover ratio = Net Credit Sales / Average accounts receivable

    Receivables turnover ratio = $100,000/$20,000

    Receivables turnover ratio = 5

    Average accounts receivable = (Beginning Account Receivable + Ending Account Receivable) / 2

    Average accounts receivable = ($15,000+$25,00) / 2

    Average accounts receivable = $40,000/2

    Average accounts receivable = $20,000
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