Han Corp's sales last year were $485,000, and its year-end receivables were $52,500. The firm sells on terms that call for customers to pay 30 days after the purchase, but some delay payment beyond Day 30. On average, how many days late do customers pay

Question

Pogo

Business

20 March, 05:05

Han Corp's sales last year were $485,000, and its year-end receivables were $52,500. The firm sells on terms that call for customers to pay 30 days after the purchase, but some delay payment beyond Day 30. On average, how many days late do customers pay

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Answers (1)

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Dana Gomez · Answer 1

Customers pay 9.51 days late

Explanation:

In order to calculate how many days late do customers pay we would have to calculate the following formula:

day sales outstanding=365 days/account receivables ratio

account receivables ratio=net credit sales/Average account receivables

account receivables ratio=$485,000/$52,500

account receivables ratio=9.238 times

day sales outstanding=365 days/9.238 times

day sales outstanding=39.51 days

Therefore, days late=39.51-30

=9.51

Customers pay 9.51 days late