Use the following information to answer the question that follow: Net Income : $205,000 Profit margin : 7.80% A/R : $151,642 Credit sales : 60% of total sales Compute the days’ sales in receivables

Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
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Use the following information to answer the question that follow:
Net Income : $205,000
Profit margin : 7.80%
A/R : $151,642
Credit sales : 60% of total sales

Compute the days’ sales in receivables

Expert Solution
Step 1: Define Accounts receivable

When a business offers consumers the option to pay later for goods or services, so records the sale's total as accounts receivable on its balance sheet. Because they are anticipated to be recovered within a very short time frame, sometimes within one year, accounts receivable are generally categorized as current assets.

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