Question

Using the following end-of-year information, calculate the number of days' sales in receivables for Year 2. Year 2: Sales are $82,500; average accounts receivable is $11,000. Year 1: Sales are $78,000; average accounts receivable is $10,000. a.48.7 b.46.8 c.7.8 d.7.5

Answer 1

Days in Receivables:

Year 2:

= Average Receivables/Sales x 365 days

= $11,000/$82,500 x 365 days

= 48.67

= 49 days

Year 1:

= Average Receivables/Sales x 365 days

= $10,000/$78,000 x 365 days

= 46.79

= 47 days

Step-by-step explanation:

a) Data:

Sales & Receivables

Year 2: Sales are $82,500; average accounts receivable is $11,000.

Year 1: Sales are $78,000; average accounts receivable is $10,000

b) he days' sales in receivables for company A measures the efficiency of credit collection by showing the number of days it takes company A to receive cash from its credit customers. It is an efficiency ratio that measures management's ability to manage credit policies.