Answer (C) is correct . The accounts receivable turnover ratio equals net credit sales divided by average accounts receivable. Maydale’s accounts receivable turnover ratio is thus 10 times {$3,600,000 ÷ [($320,000 + $400,000) ÷ 2]}
Answer (A) is incorrect because A ratio of 0.1 results from reversing the numerator and denominator of the ratio.
Answer (B) is incorrect because A ratio of 9 times results from using ending, rather than average, receivables in the denominator.
Answer (D) is incorrect because A ratio of 11.25 times results from using beginning, rather than average, receivables in the denominator.
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Maydale’s accounts receivable turnover ratio is
