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6 March, 12:56

Grandview Grinding, Inc. had net accounts receivable of $135,800 at the beginning of the year and $144,800 at the end of the year. If the company's net sales revenue during the year was $1,753,750, what is the receivables turnover ratio

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  1. 6 March, 13:05
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    The accounts receivables turnover ratio is 12.5 times.

    Explanation:

    The accounts receivable turnover ratio is a measure to check the efficiency of the business in collecting its average accounts receivables during the year. It is calculated as follow,

    Accounts receivables turnover = Net Sales / Average accounts receivables

    Where,

    Average accounts receivables = (Opening accounts receivables + Closing accounts receivables) / 2

    The average accounts receivables = (135800 + 144800) / 2 = $140300

    The accounts receivables turnover = 1753750 / 140300 = 12.5 times
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