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Asked by Annabelle Beauchamp on May 10, 2024

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Swiss Clothing Store had a balance in the Accounts Receivable account of $820000 at the beginning of the year and a balance of $780000 at the end of the year. Net credit sales during the year amounted to $7200000. The accounts receivable turnover ratio was

A) 9.0 times.
B) 8.4 times.
C) 9.2 times.
D) 8.8 times.

Accounts Receivable Turnover

A financial ratio that measures how efficiently a company collects revenue from its customers by comparing net credit sales to average accounts receivable.

Net Credit Sales

The total revenue from sales made on credit, minus returns and allowances, over a specific period.

Accounts Receivable

A financial record representing the money owed to a company by its customers for goods or services delivered on credit.

  • Appreciate the accounts receivable turnover ratio's critical role in assessing how well a company manages its receivables.
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TJ
tatenda juliana tarumeMay 17, 2024
Final Answer :
A
Explanation :
The accounts receivable turnover ratio is calculated by dividing the net credit sales by the average accounts receivable. The average accounts receivable is the sum of the beginning and ending balances divided by 2, which is ($820,000 + $780,000) / 2 = $800,000. The net credit sales are $7,200,000. Therefore, the accounts receivable turnover ratio is $7,200,000 / $800,000 = 9.0 times.

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