Jacob Atnip &Company has a net income of $196,500, a profit margin of 6.8 percent, and...

Jacob Atnip &Company has a net income of $196,500, a profit margin of 6.8 percent, and an accounts receivable balance of $119,630. Assuming 65% of sales are on credit, what is the company's days' sales outstanding (DSO) for receivables?

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Expert Solution

Total Sales = Net Profit/Profit Margin = 196500/6.8% = $2889705.88

Credit Sales = Total Sales*65% = 2889705.88*65% = $1878308.82

Days' Sales Outstanding = (Accounts Receivable/Credit Sales)*Days in Year = (119630/1878308.82)*365 = 23.25 days

jeff jeffy answered 2 years ago

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