Question

Baker Brothers has a DSO of 40 days, and its annual sales are 7,300,000. What is its accounts recievable balance? Assume it uses a 365-day year.

Answer 1

Given:

DSO = 40, Annual Sales = $ 7,300,000, Days in an year = 365

DSO = Accounts Receivable / Sales per day

Sales per day = Annual sales / No. of days in an year

= $ 7,300,000 / 365 = 20,000

DSO = Accounts Receivable / 20000

40 = Accounts Receivable / 20000

Accounts Receivable = 40*20000