Question

Consider the following financial data from the past year for Midwest Outdoor Equipment Corporation. Gross income $ 25,240,000 Total sales 24,324,000 Total credit sales 18,785,000 Net income 2,975,000 Cost of goods sold 12,600,000 Total assets 10,550,000 Average inventory 2,875,000 Average receivables 3,445,000 a. Compute the receivable turnover ratio.

Answer 1

Answer:

Receivable turnover ratio is 5.4528

Explanation:

Receivable turnover ratio:

It is used to measure how efficiently a company or firm is issuing the credits to its customers and collection g funds from them. It is a measure how assets are used by the company efficiently.

Formula:

Receivable turnover ratio=(Total credit Sales)/ (Average receivables)

$Receivable\ turnover\ ratio=\frac{\ 18,785,000}{\ 3,445,000} \\Receivable\ turnover\ ratio= 5.4528$

It is unit less.

Receivable turnover ratio is 5.4528