Question

The 2016 financial statements of CVS Health Corporation reported sales of $177,526 million and accounts receivable of $12,164 million. If sales are projected to increase 4% next year, what is the projected accounts receivable balance for 2017?

Answer 1

Answer:

The projected accounts receivable balance for 2017 is $12,650.55 million

Explanation:

For computing the projected accounts receivable, first, we have to compute the percentage of accounts receivable with sales which equal to

= Accounts receivable ÷ sales × 100

= $12,164 million ÷ $177,526 million × 100

= 6.85195%

Now, multiply this percentage with the increased sales  

The increase in sales is = Sales + (Sales × 4%)

                                   = $177,526 million + ($177,526 million × 4%)

                                   = $177,526 million + $7,101.04

                                   = $184627.04 million

So, the projected account receivable equals to

= $184627.04 million × 6.85195%

= $12,650.55 million