The financial statements of the imagine company report net sales of $1,000,000 and accounts receivable of $700,000 and $300,000 at the beginning of the year and end of year, respectively. what is the accounts receivable turnover for the imagine company?

Accounts receivable turnover is the number of times that a company collects its average account receivable per year. The ratio evaluates the ability of a company to issue credit to its customers efficiently and collect funds from them in a timely manner. A high turnover ratio indicates a number of high-quality customers. A low turnover ratio represents a large proportion of clients having financial difficulties. It also indicates an excessive amount of bad debt.

To answer the question - - what is the accounts receivable turnover for the imagine company, use this computation:

Given:

Net Sales - $1,000,000

Beginning Account Receivable = $700,000

Ending Accounts Receivable = $300,000

Let X = Accounts Receivable Turnover

X = Net Sales : ((Beginning Accounts Receivable + Ending Accounts Receivable) / 2)

X = 1,000,000 / (700,000+300,000) / 2

X = 1,000,000 / (1,000,000/2)

X = 1,000,000/500,000

X = 2