The following data have been extracted from the financial statements of a firm for two years, 1995 and 1996:
1995 1996
Assets 8,174 8,439 -
Net Sales 9,412 8,949
Receivables 1,135 986
Inventory 2,119 2,464 -
COGS 6,948 7,089 -
The receivables turnover ratio and the average receivables collection period for 1996 equal ________.
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A. B. C. D.A
Receivables turnover ratio = Net annual sales/average receivables Average receivables collection period = 365/receivables turnover. For 1996, the average receivables equal (986+1135)/2 = 1061. Receivables turnover ratio = 8949/1061 = 8.44. Average receivables collection period = 365/8.44 = 43.25 days.