Question

Swiss Clothing Store had a balance in the Accounts Receivable account of $820,000 at the beginning of the year and a balance of $780,000 at the end of the year. Net credit sales during the year amounted to $7,200,000. The accounts receivable turnover ratio was

Answer 1

9

Step-by-step explanation:

accounts receivable turnover ratio = net credit sales / average accounts receivables

• net credit sales = $7,200,000
• average accounts receivable = (beginning balance + ending balance) / 2 = ($820,000 + $780,000) / 2 = $1,600,000 / 2 = $800,000

accounts receivable turnover ratio = $7,200,000 / $800,000 = 9

The accounts receivable turnover ratio measures how effectively can a company collect its accounts receivables during a certain period.