Question

Grandview Grinding, Inc. had net accounts receivable of $135,800 at the beginning of the year and $144,800 at the end of the year. If the company's net sales revenue during the year was $1,753,750, what is the receivables turnover ratio

Answer 1

Answer:

The accounts receivables turnover ratio is 12.5 times.

Explanation:

The accounts receivable turnover ratio is a measure to check the efficiency of the business in collecting its average accounts receivables during the year. It is calculated as follow,

Accounts receivables turnover = Net Sales / Average accounts receivables

Where,

Average accounts receivables = (Opening accounts receivables + Closing accounts receivables) / 2

The average accounts receivables = (135800 + 144800) / 2  = $140300

The accounts receivables turnover = 1753750 / 140300  =  12.5 times