A company has a net income of $265,000, a profit margin of 8.3%, and an accounts...

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A company has a net income of $265,000, a profit margin of 8.3%, and an accounts receivable balance of $200,000. Assuming 70%

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Answer 1

Answer #1

The company's days sales in receivables is computed as shown below:

= (Accounts Receivables / Net Credit Sales) x 365 days

Net credit sales is computed as follows:

= ( Net Income / Profit margin ) x 70%

= ( $ 265,000 / 0.083) x 70%

= $ 2,234,939.759

So, the company's days sales in receivables will be as follows:

= ( $ 200,000 / $ 2,234,939.759) x 365 days

= 32.66 days Approximately

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Answer 2

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