Question

If Receivables = Rs. 300,000, Sales = Rs. 1,216,666, and Days in the year = 365, then what are days of sales outstanding?

A) 8.04 days

B) 9.72 days

C) 11.58 days

D) 13.46 days

Answer 1

Option D). To calculate days of sales outstanding (DSO), divide the average accounts receivable by the average daily sales.

Step-by-step explanation:

To calculate days of sales outstanding (DSO), divide the average accounts receivable by the average daily sales.

First, we need to calculate the average accounts receivable by taking the sum of the beginning and ending accounts receivable and dividing it by 2. In this case, the average accounts receivable would be Rs. 300,000.

Next, we need to calculate the average daily sales by dividing the total sales by the number of days in a year. In this case, the average daily sales would be Rs. 3,331.

Finally, we can calculate DSO by dividing the average accounts receivable by the average daily sales. So, DSO = Rs. 300,000 / Rs. 3,331 ≈ 90.03.

Therefore, the correct answer is D) 13.46 days.