Aguilera Corp. has a current accounts receivable balance of $332,875. Credit sal

Question

Aguilera Corp. has a current accounts receivable balance of $332,875. Credit sales for the year just ended were $4,207,540.

What is the company's days' sales in receivables? (Use 365 days a year. Do not round intermediate calculations. 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. Do not round intermediate calculations. Round your answer to 2 decimal places, e.g., 32.16.)

Aguilera Corp. has a current accounts receivable balance of $332,875. Credit sales for the year just ended were $4,207,540.

Explanation / Answer

1. Receivables turnover = Net Credit Sales / Average Receivables = 4,207,540 / 332,875 = 12.64 times
Note: In the absence of Average Receivables, closing receivables are considered to find the ratio.

2. Days' sales in receivables = Number of days / Receivables turnover = 365 / 12.64 = 28.88 days or 29 days

3. Average collection period is same as Days' sales in receivables like synonyms. Thus, Average collection period is also 28.88 days or 29 days.

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