Question

A company reports the following information for the year: Net credit sales $ 120,000 Average accounts receivable 20,000 Cash collections on credit sales 100,000 What is the company's receivables turnover ratio?

Answer 1

Answer:

receivable turnover ration = 6

Explanation:

credit sales = 120000

Credit sales =As we know that: Receivables turnover ration = Net credit sales /Average account receivable.

                                 =    120000/ 20000

                                 = 6.

it indicates that company convert its receivable to cash 6 times that year.