Dahn Corporation has provided the following financial data: Dividends on common stock during Year 2 totaled $1,600. The market price of common stock at the end of Year 2 was $2.37 per share. The company's accounts receivable turnover for Year 2 is closest to:
A)0.97
B)10.38
C)1.03
D)10.22

Question

Dahn Corporation has provided the following financial data:   Dividends on common stock during Year 2 totaled $1,600. The market price of common stock at the end of Year 2 was $2.37 per share. The company's accounts receivable turnover for Year 2 is closest to:
A)0.97 
B)10.38 
C)1.03 
D)10.22

Quizplus · Accepted Answer

We can use the formula for accounts receivable turnover: 
Accounts receivable turnover = net credit sales / average accounts receivable 
From the financial data provided, we can calculate the necessary values: 
Net credit sales = $74,800 - $6,800 = $68,000 
Average accounts receivable = ($6,500 + $7,800) / 2 = $7,150 
Accounts receivable turnover = $68,000 / $7,150 = 9.51 
Therefore, the closest answer choice is B) 10.38, which is the nearest value when rounded to two decimal places.

Dahn Corporation Has Provided the Following Financial Data