Rise Above This, Inc., has an average collection period of 66 days. Its average

Question

Rise Above This, Inc., has an average collection period of 66 days. Its average daily investment in receivables is $68,800. 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 66 days. Its average daily investment in receivables is $68,800. Assume 365 days per year.

Explanation / Answer

Collection Period = (365 / Credit Sales) x 68800 = 66 => Credit Sales = 365 x 68800 / 66 = $38048.8 = 380485

ANnual credit sales = $380485

Receivables turnover = Credit Sales / Avg Receivables = 380485 / 68,800 = 5.53 times

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