A company reports the following:

Sales $3,150,000

Average accounts receivable (net) 210,000

Determine:

(a) the accounts receivable turnover and (b) the number of days' sales in receivables. Round interim calculations to the nearest dollar and final answers to one decimal place. Assume a 365-day year.

a. 15 times

b. 24.3 days

Explanation:

The computation is shown below:

a. Accounts receivable turnover

Account receivable turnover ratio = Net credit sales : Average accounts receivable

= $3,150,000 : $210,000

= 15 times

b. Number of days sales in receivables = Total number of days in a year : accounts receivable turnover ratio

= 365 days : 15 times

= 24.3 days