Question

A company has net income of $187,000, a profit margin of 8.6 percent, and an accounts receivable balance of $126,370. assuming 60 percent of sales are on credit, what is the company's days' sales in receivables? (use 365 days a year. do not round intermediate calculations and round your answer to 2 decimal places,
e.g., 32.16.)

Answer 1

The solution for this problem is get first the total sales, credit sales and receivables turnover.
187,000 / 0.086 = $2,174,418 this is your total sales 

2,174,418 x 60% = $1,304,651 is your credit sales 

1,304,651 / 126,370 = 10.32 times is the Receivables turnover 

365 / 10.32 = 35.37 days is the day's sales in receivables