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Beverage International reports net credit sales for the year of $312,000. The company's accounts receivable balance at the beginning of the year equaled $39,000 and the balance at the end of the year equaled $49,000. What is Beverage International's receivables turnover ratio? (Round your answer to one decimal place.)

Respuesta :

Answer:

Accounts Receivables Turnover Ratio = [tex]\frac{312,000}{44,000} = 7.091[/tex]

Explanation:

Accounts Receivables Turnover Ratio = [tex]\frac{Net \:Credit \:Sales}{Average \:Accounts \:Receivables}[/tex]

Here we are provided,

Net Credit sales for the year = $312,000

Accounts Receivables opening balance = $39,000

Accounts Receivables Closing Balance = $49,000

Average balance of Accounts Receivables = [tex]\frac{39,000 \:+ \:49,000}{2} = 44,000[/tex]

Accounts Receivables Turnover Ratio = [tex]\frac{312,000}{44,000} = 7.091[/tex]

This ratio is used to assess the effectiveness of a company in collecting it's debts, and how much credit shall be given.

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