Question

assuming that net credit sales for year 2 totaled $163,000, what is the company's most recent accounts receivable turnover?

Answer 1

The answer is 20.90 times.

What is Accounts receivable turnover?

Accounts receivable turnover is a metric to monitor closely as it measures how effectively a company handles the collections process. Cash flow can be depleted if money from customers does not arrive as agreed upon expectations.

Conversely, efficient collections management makes a company's cash flows more predictable, reduces collections costs, and creates a healthier balance sheet. This is a very important factor if a company wants to earn credit, invest in growth and attract investors.

Calculations:

$Accounts receivable turnover = \frac{ Net credit sales}{Average accounts receivable }$

                        = $ 163,000/$ 7,800

                        = 20.90 times

Average accounts receivable = (opening accounts receivable + closing accounts receivable )/2

                       = ($ 8,800+$ 6,800)/2

                        = $ 7,800.

Therefore, Accounts Receivable Turnover is 20.90 times.

To learn more about the Accounts Receivable Turnover, click on the given link: https://brainly.com/question/27523896

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