Answer:
8.3 times
43.8 days
Explanation:
Accounts receivable turnover measure the average times the company received their receivable, It measure the efficiency of the company regarding collection from customers. Turnover will be higher if company has low ratio of receivables to sales value.
Average Receivable can be calculated as below
Average Receivable = (Accounts Receivable at the beginning of the year + Accounts Receivable at the end of the year) / 2 = ($50,000 + $70,000)/2 = $60,000
Net Sales = $500,000
Formula for Accounts receivable turnover is as follow
Accounts receivable turnover = Net Sales / Average Receivable
Accounts receivable turnover = $500,000 / $60,000 = 8.3 times
Days Sales Receivable is also know as Days receivables. It is an method of estimation of a company for the receivables value. it measure the numbers of days at average account receivable take after sales to convert into cash.
Formula for Days Sales Receivable is as follow
Days Sales Receivable = ( $60,000 / $500,000 ) x 365 = 43.8 days
