Question

Suppose the 2022 financial statements of 3M Company report net sales of $22.2 billion. Accounts receivable (net) are $2.9 billion at the beginning of the year and $3.02 billion at the end of the year.

Compute 3M’s accounts receivable turnover. (Round answer to 1 decimal place, e.g. 12.5.) Accounts receivable turnover ratio enter the accounts receivable turnover ratio in times rounded to 1 decimal place

Compute 3M’s average collection period for accounts receivable in days. (Round answer to 1 decimal place, e.g. 12.5. Use 365 days for calculation.)

Average collection period

enter the average collection period in days rounded to 1 decimal place

days

Answer 1

Average Account Receivables = (beginning Account Receivables + ending Account Receivables)/2
= ( $2.9+3.02)/2
= $ 2.96
Account Receivables Turnover Ratio = Sales / average Account Receivables
= $22.2/2.96
=7.5 times
Average Collection Period = 365/ Account Receivables turnover ratio
= 365 days /7.5
=48.7 days
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