Question

Boom lay corp. has a current accounts receivable balance of $327,815. credit sales for the year just ended were $4,238,720. what is the receivables turnover?

Answer 1

The receivable turnover ratio represents the efficiency of the business to converts its credits sales into the collection.  It can be calculated with the help of following formula:

Receivable turnover ratio = Credit sales / Accounts receivable

= 4,238,720 / 327,815

= 12.93 times

Hence the Receivable turnover ratio is 12.93 times.

(Note: The alternate formula for the Receivable turnover ratio is Credit sales / Average Accounts receivable)