### Financial Analysis ProblemThe financial statements of the **Sheffield Corp.** report net sales of **$690,150** and accounts receivable of **$98,000** and **$31,000** at the beginning of the year and end of year, respectively. **What is the accounts receivable turnover for Sheffield Corp.?**#### Options:- ( ) 22.3 times- ( ) 5.4 times- ( ) 7.0 times- ( ) 10.7 times### Explanation:The accounts receivable turnover ratio is a measure used to quantify a firm's effectiveness in collecting its receivables. It is computed using the following formula:\[ \text{Accounts Receivable Turnover} = \frac{\text{Net Sales}}{\text{Average Accounts Receivable}} \]Where:- **Net Sales**: Total revenue from sales after returns and discounts.- **Average Accounts Receivable**: The average of accounts receivable balances at the beginning and end of the period.For Sheffield Corp.:- **Net Sales** = $690,150- **Beginning Accounts Receivable** = $98,000- **Ending Accounts Receivable** = $31,000- **Average Accounts Receivable** = $\frac{98,000 + 31,000}{2} = 64,500$Plug these values into the formula:\[ \text{Accounts Receivable Turnover} = \frac{690,150}{64,500} \approx 10.7 \]Thus, the correct answer is:- ( ) 22.3 times- ( ) 5.4 times- ( ) 7.0 times- (X) 10.7 times

Accounts receivable turnover ratio is computed to determine the efficiency of the entity to collect…

The financial statements of the Sheffield Corp. reports net sales of $690150 and accounts receivable of $98000 and $31000 at the beginning of the year and end of year, respectively. What is the accounts receivable turnover for Sheffield Corp.? O 22.3 times O 5.4 times O 7.0 times O 10.7 times

The financial statements of the Sheffield Corp. reports net sales of $690150 and accounts receivable of $98000 and $31000 at the beginning of the year and end of year, respectively. What is the accounts receivable turnover for Sheffield Corp.? O 22.3 times O 5.4 times O 7.0 times O 10.7 times

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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