Final answer:
The accounts receivable turnover for ABC Inc. is calculated by dividing its net sales of $1,584,135 by its accounts receivables of $694,721, resulting in a turnover rate of 2.28.
Step-by-step explanation:
The question asks about the calculation of the accounts receivable turnover, which is a measure of how often a company collects on its outstanding credit accounts over a period. To calculate the turnover, we divide the net sales by the average accounts receivable, but since an average is not provided here, we will use the given accounts receivables figure for simplicity. The formula for the calculation is as follows:
Accounts Receivable Turnover = Net Sales / Accounts Receivables
Given the information:
- Net Sales = $1,584,135
- Accounts Receivables = $694,721
The accounts receivable turnover for ABC Inc. would be:
Accounts Receivable Turnover = $1,584,135 / $694,721 = 2.28
This means that ABC Inc. turns over its accounts receivable roughly 2.28 times during the period in question. This figure helps in understanding how efficiently the company is managing its credit sales and collecting cash from its customers.