Homework Answers
1.
Receivables turnover ratio
= Net credit sales / Net average accounts receivables
= $60,319,000 / [($7,599,000 + $7,252,000) / 2]
= 8.12 times
Days sales in receivables = 365 / Receivables turnover ratio = 365 / 8.12 = 44.95 or 45 (rounded up) days
2.
Receivables turnover ratio is 8.12 times. This means, the company is able to turnover its average receivables 8.12 times in a year. In other words, the company is able to collect its average receivables 8.12 times in a year.
Days' sales in receivables is 45 days. This means, the company is able to collect its average receivables in 45 days.
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A recent annual report for NPS contained the following data:
(dollars in thousands)
Current Year
Previous Year
Accounts receivable
$
3,727,000
$
4,527,000
Less: Allowance for doubtful accounts
185,000
148,000
Net accounts receivable
$
3,542,000
$
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Net sales (assume all on credit)
$
35,397,000
Required:
1. Determine the receivables turnover ratio and
average days sales in receivables for the current year.
(Use 365 days a year. Do not round intermediate
calculations. Enter your answers in thousands not in
dollars.)...
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A recent annual report for NPS contained the following data:
(dollars in thousands)
Current Year
Previous Year
Accounts receivable
$
3,727,000
$
4,527,000
Less: Allowance for doubtful accounts
185,000
148,000
Net accounts receivable
$
3,542,000
$
4,379,000
Net sales (assume all on credit)
$
35,397,000
Required:
1. Determine the receivables turnover ratio and
average days sales in receivables for the current year.
(Use 365 days a year. Do not round intermediate
calculations. Enter your answers in thousands not in
dollars.)...
Consider the following information:Year 2Year 1Accounts receivable$88,000$80,000Merchandise inventory66,00080,000Net sales408,000380,000Cost of goods sold248,000228,000What is the Year 2 receivables turnover ratio for Year 2? (Round your answer to 2 decimal places.) Receivables turnover ratio = _______
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