Question

Refer to the information for orca industries. orca's accounts receivable turnover is (assume that orca makes all sales on account):__________

Answer 1

Given the information for Orca's industries, Orca's accounts receivable turnover is 11.2

What is the receivables turnover?

Receivable turnover is an example of an activity ratio. Activity ratios are financial ratios that measure the efficiency with which a firm performs its daily tasks. Other activity ratios are  Current ratio, Quick ratio, asset turnover ratio and inventory ratio.

Receivable turnover measure the efficiency with which a firm converts its receivables to revenue. receivable turnover is the ratio of revenue and average receivables.

Receivable turnover = revenue / average receivable

Average receivable = (6,000 + 1,500) / 2 = $3,750

Revenue = $42,000

Receivable turnover = $42,000 / $3,750 = 11.2

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