Question

The 2018 financial statements of BNSF Railway Company report total revenues of $19,548 million, accounts receivable of $1,189 million for 2018 and $955 million for 2017. The company’s accounts receivable turnover for 2018 is:A) 16.4 daysB) 20.5 timesC) 18.2 daysD) 18.2 timesE) None of the above

Answer 1

D) 18.2 times

Step-by-step explanation:

The accounts receivable turnover is determined by dividing the total credit revenues by the average receivables.

The average receivables is the sum of the opening and closing receivable balances divided by 2.

The average receivables is ( $ 1,189 + $ 955) / 2 = $ 1,072

The total revenues in the absence of other information is considered as credit sales.

Average receivables turnover = $ 19,548 / $ 1,072 = 18.24 times