XYZ's receivables turnover is 4x. The accounts receivable at year-end are $600,000. The average collection period is 90 days. What was the sales figure for the year assuming all sales are on credit?
A) $60,000
B) $6,000,000
C) $2,400,000
D) $54,000,000

Question

Quizplus · Accepted Answer

The receivables turnover ratio is calculated as sales divided by average accounts receivable. Given a turnover of 4x and year-end receivables of $600,000 (assuming this represents the average for simplicity), sales are 4 * $600,000 = $2,400,000. The average collection period supports this calculation but is not directly needed to find the sales figure.

XYZ's Receivables Turnover Is 4x