Ask Question
BusinessBusiness
9 October, 00:36

Real World Financials ABC Corporation reported the following information in its financial statements for three successive quarters ($ in millions) : Three Months Ended 9/30/2017 (Q1) 6/30/2017 (Q4) 3/31/2017 (Q3) Balance sheets: Accounts receivable, net $ 21,361 $ 19,880 $ 12,970 Income statements: Sales revenue $ 24,620 $ 23,400 $ 22,260 Required: Compute the receivables turnover ratio and the average collection period for Q1 and Q4. Assume that each quarter consists of 91 days. (Round average accounts receivable answers to nearest whole dollar. Enter your answers in millions. Round "Turnover ratio" answers to 3 decimal places.)

+1
Answers (1)
  1. 9 October, 00:45
    0
    (Q4) Receivables turnover ratio = 1.135

    (Q1) Receivables turnover ratio = 1.153

    Average collection period for Q1=31 7 days

    Average collection period for Q4 = 317 days

    Explanation:

    The Receivables turnover ratio gives us the efficiency of collections and the Average collection period tells us the number of days in which the receivable is collected.

    Three Months Ended (Q1) (Q4) (Q3)

    9/30/2017 6/30/2017 3/31/2017

    Balance sheets:

    Accounts receivable, net $ 21,361 $ 19,880 $ 12,970

    Income statements:

    Sales revenue $ 24,620 $ 23,400 $ 22,260

    Receivables turnover ratio = Net Sales / Average Accounts Receivable

    Average Accounts Receivable = Net Receivables for one Quarter + Net Receivables for other Quarter/2

    (Q3) Receivables turnover ratio = $ 22,260 / $ 12,970 + $ 19,880/2

    (Q3) Receivables turnover ratio = $ 22,260 / 16425

    (Q3) Receivables turnover ratio = 1.355

    This indicates that average accounts receivable balance is converted into cash 1.355 times during the quarter.

    (Q4) Receivables turnover ratio = $ 23,400 / $ 19,880 + $ 21,361 / 2

    (Q4) Receivables turnover ratio = $ 23,400 / 20620.5

    (Q4) Receivables turnover ratio = 1.135

    This indicates that average accounts receivable balance is converted into cash 1. 135 times during the quarter.

    (Q1) Receivables turnover ratio = $ 24,620/$ 21,361 (assuming net is average)

    (Q1) Receivables turnover ratio = 1.153

    This indicates that net accounts receivable balance is converted into cash

    1. 153 times during the quarter.

    Average collection period for Q1 = 365 / Receivables turnover ratio

    Average collection period for Q1 = 365/1.153 = 316.6 = 317 days

    Average collection period for Q1=31 7 days

    Average collection period for Q4 = 365/Receivables turnover ratio

    Average collection period for Q4 = 365/1.15 = 317.4 = 317 days
Know the Answer?
Not Sure About the Answer?
Find an answer to your question 👍 “Real World Financials ABC Corporation reported the following information in its financial statements for three successive quarters ($ in ...” in 📗 Business if the answers seem to be not correct or there’s no answer. Try a smart search to find answers to similar questions.
Search for Other Answers
You Might be Interested in
Mathew, a manager, tells one of his subordinates, Emily, that she is irresponsible and does not make valuable contributions to the team. Which form of communication has Mathew used in the given example? A. Passive communication B.
Answers (1)
The period of time when business slows, workers are laid off, and GDP declines is what part of the business cycle?
Answers (1)
Equity markets, despite recent volatility, are still near record highs. At the same time the rate on ten year Treasuries are falling; that is, the yield curve has flattened (even turned negative briefly) and now is moderately upsloping.
Answers (1)
n certain circumstances, a taxpayer who provides less than half the support of another may still be able to claim that person as a dependent as a qualifying relative. True/false
Answers (1)
If the reserve requirement was 15% and a bank customer makes a deposit of $500, the initial result would be: a. a $3,333 increase in required reserves and an $425 increase in excess reserves. be.
Answers (1)
New Questions in Business
Suggestive selling, accepting credit cards as payment, and expanding operating hours to 24 hours are strategies used by the fast food industry to
Answers (1)
How much student loan interest is tax deductible 2016?
Answers (1)
Tracy company, a manufacturer of air conditioners, sold 100 units to thomas company on november 17, 2013. the units have a list price of $500 each, but thomas was given a 30% trade discount. the terms of the sale were 2/10, n/30.
Answers (1)
The Hamada Company sales for 2018 totaled $150,000 and purchases totaled $95,000. Selected January 1, 2018, balances were: accounts receivable, $18,000; inventory, $14,000; and accounts payable, $12,000.
Answers (1)
Jim is evaluating project that will pay him $5,000 per year for 5 years, and then cost him $4,000 per year for 12 years. Jim's opportunity cost of capital for this project is 18 percent.
Answers (1)
Home » Business » Real World Financials ABC Corporation reported the following information in its financial statements for three successive quarters ($ in millions) : Three Months Ended 9/30/2017 (Q1) 6/30/2017 (Q4) 3/31/2017 (Q3) Balance sheets: Accounts receivable,
Sign Up Forgot Password?