Evil Pop, Inc., has an average collection period of 58 days. Its average daily i

Question

Evil Pop, Inc., has an average collection period of 58 days. Its average daily investment in receivables is $91,100. Assume 365 days per year.

What is the receivables turnover? (Do not round intermediate calculations and round your answer to 4 decimal places, e.g., 32.1616.)

What are annual credit sales? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)

Evil Pop, Inc., has an average collection period of 58 days. Its average daily investment in receivables is $91,100. Assume 365 days per year.

Explanation / Answer

average collection period = (accounts receivables / credit sales) *365

58 = (1/receivables turnover ratio ) *365

receivables turnover ratio = 365/58 = 6.2931

receivables turnover ratio = 6.2931

credit sales/ receivables = 6.2931

credit sales / 91100 = 6.2931

credit sales = 573,301.72

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