Question

Greene Sisters has a DSO of 20 days. The company’s average daily sales are $20,000. What is the level of its accounts receivable? Assume there are 365 days in a year. Ehrhardt, Michael C.. Corporate Finance: A Focused Approach (MindTap Course List) (p. 129). Cengage Learning. Kindle Edition.

Answer 1

The level of Greene Sisters company's accounts receivable is calculated by multiplying the average daily sales by the Days Sales Outstanding (DSO), resulting in $400,000.

Step-by-step explanation:

The student's question pertains to calculating the level of accounts receivable based on the Days Sales Outstanding (DSO) and average daily sales. In this case, the Greene Sisters company has a DSO of 20 days and average daily sales of $20,000. To find the level of accounts receivable, we use the formula:

Accounts Receivable = Average Daily Sales × DSO

Accounts Receivable = $20,000 × 20

Accounts Receivable = $400,000

Thus, the level of Greene Sisters' accounts receivable is $400,000.