Suppose the 2017 financial statements of 3M Company report net sales of $22.4 bi

Question

Suppose the 2017 financial statements of 3M Company report net sales of $22.4 billion. Accounts receivable (net) are $2.90 billion at the beginning of the year and $3.47 billion at the end of the year. Collapse question part

(a) Compute 3M Company’s receivable turnover. (Round answer to 1 decimal place, e.g. 12.5.) Accounts receivable turnover ratio Entry field with incorrect answer now contains modified data times

2)Compute 3M’s average collection period for accounts receivable in days. (Round answer to 1 decimal place, e.g. 12.5. Use 365 days for calculation.)

Explanation / Answer

(a) Receivable turnover = Net credit sales / Average accounts receivable = $22.4 billion / [($2.90 billion + $3.47 billion) / 2] = 7.03

(b) Average collection period(in days) = 365 / Accounts receivable turnover ratio = 365 / 7.03 = 51.9 days

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