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Twist Corp. has a current accounts receivable balance of $328,800. Credit sales for the year just...

Twist Corp. has a current accounts receivable balance of $328,800. Credit sales for the year just ended were $4,192,200.

a. What is the company's receivables turnover? (Do not round intermediate calculations. Round your answer to 2 decimal places, e.g., 32.16.)

b. What is the company's days' sales in receivables? (Use 365 days a year. Do not round intermediate calculations. Round your answer to 2 decimal places, e.g., 32.16.)

c. How long did it take on average for credit customers to pay off their accounts during the past year? (Use 365 days a year. Do not round intermediate calculations. Round your answer to 2 decimal places, e.g., 32.16.)

Solutions

Expert Solution

Accounts Receivable = $328,800

Credit sales for the year just ended = $4,192,200

What is the company's receivables turnover?

Accounts Receivable Turnover = Net Credit Sales/ Accounts Receivables

                                                  = $4,192,200 / $328,800

                                                  = 12.75 Times.

What is the company's days' sales in receivables?

Days Sales in Receivables = Accounts Receivables / Net Credit Sales * 365

                                            = $328,800 / $4,192,200 * 365

                                            = 28.62 Times

How long did it take on average for credit customers to pay off their accounts during the past year?

Average Collection Period = Accounts Receivables/ Net Credit Sales * 365

                                           = $328,800 / $4,192,200 * 365

   = 28.62 Times

Note : Based on 365 Days in Year

jeff jeffy answered 3 months ago
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