The accounts receivable turnover ratio is net annual credit sales / average accounts receivable. This is total sales / average accounts receivable. Since 6% of the company's sales are for cash, net credit sales are 94% (1 ? 6%) of total sales.
The accounts receivable turnover ratio is net annual credit sales / average accounts receivable. This is net annual credit salaes / beginning accounts receivable.
The accounts receivable turnover ratio is net annual credit sales / average accounts receivable. Net annual accounts receivable is total sales of $1,700,000 × (1 ? .06), or $1,598,000. Average accounts receivable is the average of the beginning and ending accounts receivable balances, which is ($168,000 + $147,000) / 2, or $157,500. The accounts receivable turnover ratio is therefore $1,598,000 / $157,500, which equals 10.15.
The accounts receivable turnover ratio is net annual credit sales / average accounts receivable. This is net annual credit salaes / ending accounts receivable.
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