Rise Above This, Inc., has an average collection period of 70 days. Its average

Question

Rise Above This, Inc., has an average collection period of 70 days. Its average daily investment in receivables is $45,300. Assume 365 days per year.

What is the receivables turnover? (Round your answer to 4 decimal places. (e.g., 32.1616))

What are annual credit sales? (Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16))

Rise Above This, Inc., has an average collection period of 70 days. Its average daily investment in receivables is $45,300. Assume 365 days per year.

Explanation / Answer

Accounts Receivables Turnover = Net Credit Sales / Average Accounts receivable

Average Collection Period = 365 days / Accounts Receivables  Turnover

given average collection period of 70 days.

Hence, Average Collection Period = 365 days / Accounts Receivables  Turnover

=> 70 days =  365 days / Accounts Receivables  Turnover

=> Accounts Receivables  Turnover = 365 / 70 = 5.2143 times.

2) Accounts Receivables Turnover = Net Credit Sales / Average Accounts receivable

given average daily investment in receivables is $45,300

Annual credit sales = Average Accounts receivable x Accounts Receivables Turnover

= $45,300 x  5.2143 times = $236207.79

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