Question

National, Inc. provides the following​ data: 2019 2018 Cash $40,000 $25,000 Accounts​ Receivable, Net 128,000 62,000 Merchandise Inventory 71,000 50,000 Property, Plant, and​ Equipment, Net 190,000 120,000 Total Assets $429,000 $257,000 For the year ending Decem er​ 31, 2019: Net Credit Sales $290,000 Cost of Goods Sold (110,000​) Gross Profit $180,000 Calculate the accounts receivable turnover ratio for 2019

Answer 1

Accounts Receivable Turnover (2019) = 3.05 times

Step-by-step explanation:

Accounts Receivables Turnover ratio is a measure to check the effectiveness of the business and extending and collecting its accounts receivable. The Accounts Receivable turnover ratio can be calculated by dividing the Net Credit Sales by the average accounts receivables.

Accounts Receivables Turnover = Net Sales / Average Accounts Receivable

First we calculate the average accounts receivable using the 2018 and 2019 accounts receivable figures.

Average accounts receivable = (128000 + 62000) / 2 = $95000

Accounts Receivable Turnover (2019) = 290000 / 95000

Accounts Receivable Turnover (2019) = 3.0526 times rounded off to 3.05