Company A reported sales during the year of $1,000,000. Its average accounts rec

Question

Company A reported sales during the year of $1,000,000. Its average accounts receivable balance during the year was $250,000. Company B reported sales during the same year of $400,000 and had an average accounts receivable balance of $40,000.

Compute the accounts receivable turnover for both companies.
Company A:   _____________    times
Company B: _____________      times

What is the average length of time each company takes to collect
its receivables? Assume 360 days in a year
Company A: _____________ days
Company B: _____________     days

Explanation / Answer

accounts receivable turnover for Company A=1000000/250000=4

accounts receivable turnover for Company B=400000/40000=10

average length of time each company takes to collect company A=360/4=90 days

average length of time each company takes to collect company B=360/10=36 days

the above are answer

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