A company has net income of $190,000, a profit margin of 9.20 percent, and an accounts...

A company has net income of $190,000, a profit margin of 9.20 percent, and an accounts receivable balance of $106,056. Assuming 66 percent of sales are on credit, what is the company's days' sales in receivables?

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Expert Solution

Sales = Net income / Profit margin

Sales = $190,000 / 0.0920

Sales = $2,065,217.39

Credit sales = $2,065,217.39 * 0.66

Credit sales = $1,363,043.48

Receivables turnover = Credit sales / Accounts receivable

Receivables turnover = $1,363,043.48 / $106,056

Receivables turnover = 12.85 times

Days’ sales in receivables = 365 days / Receivables turnover

Days’ sales in receivables = 365 / 12.85

Days’ sales in receivables = 28.40 days

jeff jeffy answered 2 years ago

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