XYZ Company has annual sales of $692,584. The cost of goods sold are $444,925. The firm...

XYZ Company has annual sales of $692,584. The cost of goods sold are $444,925. The firm has an accounts receivable balance of $5,685, an accounts payable balance of $18,445 and inventory of $9,946.

How many days on average does it take the firm to collect its accounts receivable? That is, what is the average collection period? Assume 365 days.

Expert Solution

Average collection period =( 365 * Average accounts receivable / Sales )

Annual sales = $ 692,584

Accounts receivable = $ 5,685

Average Collection period = 365 * 5,685 / 692,584 = 2.996 days = approx 3 days

jeff jeffy answered 2 years ago

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