Asked by Sabrina Benavides on Jun 18, 2024
Verified
A company had net sales of $550,000 and an average accounts receivable of $110,000.Its accounts receivable turnover equals 5.0.
Accounts Receivable Turnover
A financial metric that measures how many times a business collects its average accounts receivable amount within a period, indicating the efficiency of credit and collections.
Net Sales
The total revenue from sales transactions after deducting returns, allowances for damaged or missing goods, and any discounts offered.
- Understand how the accounts receivable turnover ratio is calculated and what it indicates about a company's efficiency in collecting receivables.
Verified Answer
EL
EASY LEARN SINGH CLASSESJun 19, 2024
Final Answer :
True
Explanation :
Accounts receivable turnover = Net sales / Average accounts receivable
= $550,000 / $110,000
= 5.0
= $550,000 / $110,000
= 5.0
Learning Objectives
- Understand how the accounts receivable turnover ratio is calculated and what it indicates about a company's efficiency in collecting receivables.
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