Calculate C Co's receivables turnover ratio and the days' sales in receivables for 2012.
A)11.43 times and 31.9 days
B)11.02 times and 33.1 days
C)11.15 times and 32.7 days
D)3.47 times and 105.2 days

Question

Quizplus · Accepted Answer

The receivables turnover ratio is calculated by dividing net credit sales by average net accounts receivable. The days' sales in receivables is calculated by dividing 365 days by the receivables turnover ratio. For 2012, C Co's net credit sales were $1,250,000 and its average net accounts receivable were $109,394. Therefore, its receivables turnover ratio is $1,250,000 / $109,394 = 11.43 times. Its days' sales in receivables is 365 days / 11.43 times = 31.9 days.

Calculate C Co's Receivables Turnover Ratio and the Days' Sales