Question

From the following details, calculate the accounts receivable turnover ratio: 

Sales 400,000

Cost of the Goods sold 100,000 

Account Receivable (at the beginning of the year) Rs.60,000

Account Receivable (at the end of the year) Rs.100,000

A 4 Correct Answer Incorrect Answer
B 5 Correct Answer Incorrect Answer
C 6.67 Correct Answer Incorrect Answer
D 2 Correct Answer Incorrect Answer
E Cannot be determined Correct Answer Incorrect Answer

Solution

Accounts receivable turnover ratio = Net Sales/ Average Account Receivables  Average Receivables = (60,000+100,000)/2=80,000 Accounts receivable turnover ratio = 400,000/80,000 = 5

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