Company A made sales this year of $400,000 and has ending accounts receivable of
ID: 2589896 • Letter: C
Question
Company A made sales this year of $400,000 and has ending accounts receivable of $120,000. Company Z made sales this year of $900,000 and has ending accounts receivable of $280,000. Which of the following is true?
a. It takes Company Z approximately 4 days longer to collect its accounts receivable than it takes Company A.
b. It takes Company A approximately 4 days longer to collect its accounts receivable than it takes Company Z.
c. It takes Company Z approximately 13 days longer to collect its accounts receivable than it takes Company A.
d. It takes Company A approximately 13 days longer to collect its accounts receivable than it takes Company Z.
Explanation / Answer
Company A days to collect accounts receivable=120000/400000*365= 109.5 Company Z days to collect accounts receivable=280000/900000*365= 113.6 It takes Company Z approximately 4 days longer to collect its accounts receivable than it takes Company A.
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