Boom Lay Corp. has a current accounts receivable balance of $330,800. Credit sal

Question

Boom Lay Corp. has a current accounts receivable balance of $330,800. Credit sales for the year just ended were $3,804,200. What is the receivables turnover? (Round your answer to 2 decimal places. (e.g., 32.16)) What is the days' sales in receivables? (Use 365 days a year. Round your answer to 2 decimal places. (e.g., 32.16)) How long did it take on average for credit customers to pay off their accounts during the past year? (Use 365 days a year. Round your answer to 2 decimal places. (e.g., 32.16))

Explanation / Answer

1) We need to find the receivable turnover for Boom Lay Corp.

Receivable turnover = Credit Sales for the year/Receivables

= $3804200/$330800

=11.50 times

2) Days sales in receivables= Days in a year/Receivables turnover (as determined in point1)

= 365/11.50

=31.74 days

3) As the days sales in receicvables is 31,74 days it took to 31.74 days for the average customer to pay off

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