Question

Pujols lumber yard has a current accounts receivable balance of $527,167. credit sales for the year just ended were $5,938,261. requirement 1: what is the receivables turnover?

Answer 1

Calculation of receivables turnover:

Receivables turnover can be calculated with the help of following formula:

Receivables turnover = Net Credit Sales / Average Accounts Receivable

Net credit Sales is given $5,938,261 and we are assuming the Average Accounts Receivable be $527,167

Hence, Receivables turnover = $5,938,261/ $527,167 = 11.26

Hence, Receivables turnover is 11.26