A firm has $42,900 in receivables and $211,800 in total assets.The total asset turnover rate is 1.40 and the profit margin is 5.2 percent.How long on average does it take the firm to collect its receivables?
A)6.91 days
B)9.45 days
C)11.68 days
D)31.25 days
E)52.81 days

Question

Quizplus · Accepted Answer

Accounts receivable turnover = ($211,800 × 1.40)/$42,900 = 6.9119; Days' sales in receivables = 365/6.9119 = 52.81 days

A Firm Has $42,900 in Receivables and $211,800 in Total