BBB Ltd has provided the following information from its financial statements for the year ended 30 June 2015.
$$\begin{array} { l r }
\text { Sales (all on credit) } & \$ 1,900,000 \
\text { Gross profit on sales } & 900,000 \
\text { Net profit } & 150,000 \
\text { Cost of sales } & 1,000,000 \
\text { Inventory at end of year } & 200,000 \
\text { Accounts receivable at end of year } & 500,000
\end{array}$$
The company trades 365 days per year.
-The number of times BBB's accounts receivable turned over for 2015 is:
A) 5.0 times.
B) 1.8 times.
C) 3.8 times.
D) 2.0 times.

Question

BBB Ltd has provided the following information from its financial statements for the year ended 30 June 2015.
$$\begin{array} { l r } 
\text { Sales (all on credit) } & \$ 1,900,000 \
\text { Gross profit on sales } & 900,000 \
\text { Net profit } & 150,000 \
\text { Cost of sales } & 1,000,000 \
\text { Inventory at end of year } & 200,000 \
\text { Accounts receivable at end of year } & 500,000
\end{array}$$
The company trades 365 days per year.
-The number of times BBB's accounts receivable turned over for 2015 is:
A) 5.0 times.
B) 1.8 times.
C) 3.8 times.
D) 2.0 times.

Quizplus · Accepted Answer

The accounts receivable turnover ratio is calculated by dividing total sales by the average accounts receivable. Given that sales are $1,900,000 and assuming the accounts receivable at the end of the year represents the average (since no beginning balance is provided), the calculation is $1,900,000 / $500,000 = 3.8 times.

BBB Ltd Has Provided the Following Information from Its Financial