Question

Net credit sales $120,000 Average accounts receivable 20,000 Cash collections on credit sales 100,000 What is the receivables turnover ratio

Answer 1

Answer:

6:1

Explanation:

Net credit sales is $120,000

Account receivable is $20,000

Cash collection on credit sales is $100,000

.

Therefore the receivables turnover ratio can be calculated as follows

= 120,000/20,000

= 6:1

Hence receivable turnover ratio is 6:1