Question

Billings Inc. has net income of $161,000, a profit margin of 7.6 percent, and an accounts receivable balance of $127,100. Assume that 66 percent of sales are on credit. What is the days' sales in receivables?

Answer 1

Answer:

33.18 days

Explanation:

Sales = $161,000 / 0.076

Sales = $2,118,421  

Credit sales = 66% * Sales

Credit sales = 66 % * $2,118,421

Credit sales = $1,398,158

Receivable turnover = Credit sales / Account receivable balance

Receivable turnover = $1,398,158 / $127,100

Receivable turnover = 11 times

Days sales in receivable = 365 days / 11

Days sales in receivable = 33.18 days