Question

Beverage International reports net credit sales for the year of $240,000. The company's accounts receivable balance at the beginning of the year equaled $20,000 and the balance at the end of the year equaled $30,000. What is Beverage International's receivables turnover ratio?A. 12.0.B. 9.6.C. 8.0.D. 1.5.

Answer 1

Answer:

.B. 9.6

Explanation:

The formula and the computation of the accounts receivable turnover ratio is shown below:

Account receivable turnover ratio = Net credit sales ÷ Average accounts receivable  

where,  

Net credit sales is $240,000

And, the Average accounts receivable would be

= (Accounts receivable, beginning of year + Accounts receivable, end of year) ÷ 2

= ($20,000 + $30,000) ÷ 2

= $25,000

So, the accounts receivable turnover ratio would be

= $240,000 ÷ $25,000

= 9.6 times