Question

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.)
A recent annual report for NPS contained the following data: Accounts receivable Less: Allowance for doubtful accounts Net accounts receivable Net sales (assume all on credit) (dollars in thousands) Current Year Previous Year $ 3, 727,000 $ 4,527,000 185,000 148,000 $ 3,542,000 $ 4,379,000 $ 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.) Receivables Turnover Ratio Numerator Denominator 0 times Average Days Sales in Receivables Numerator Denominator days

Answer 1

Average net accounts receivable = ( Beginning net accounts receivable + Ending net accounts receivable)/2

= ( 4,379,000+3,542,000)/2

= 7,921,000/2

= $3,960,500

Receivables Turnover Ratio
Numerator	Net Sales	=	35,397,000	=	8.94	times
Denominator	Average net accounts receivable		3,960,500

Average Days Sales in Receivables
Numerator	Days a year	=	365	=	41	days
Denominator	Receivables Turnover Ratio		8.94

Note: Exact answer may slightly differ due to rounding off