**Understanding Receivables Turnover: An Educational Insight**---**Context:**This excerpt is focused on understanding how the receivables turnover ratio reflects a firm's efficiency in managing its accounts receivable.**Question:**Which one of the following statements is correct if a firm has a receivables turnover of 10?**Options:**- **Option A:** - It takes the firm 10 days to collect payment from its customers.- **Option B:** - It takes the firm 36.5 days to sell its inventory and collect the payment from the sale.- **Option C:** - It takes the firm an average of 36.5 days to sell its items.- **Option D:** - The firm collects on its sales in an average of 36.5 days.- **Option E:** - The firm has ten times more in accounts receivable than it does in cash.**Analysis:**The receivables turnover ratio indicates how often a company collects its average accounts receivables in a period. A turnover of 10 means the company collects its receivables 10 times a year. To find the average collection period (in days), divide 365 by the turnover ratio.---**Note:**Graphs or diagrams are not present in this text.

In this question, we are required to determine the correct statement related to receivables turnover…

Answered: Which one of the following statements…

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

Section: Chapter Questions

Problem 1PS

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Baghiben
A Mikey's sells $119,500 of its accounts receivable to factors at a 1% discount. The firm’s average collection period is one month. What is the dollar cost of the factoring service? Dollar-cost of the factoring service $_________ per month
Aggarwal Inc. buys on terms of 2/10, net 30, and it always pays on the 30th day. The CFO calculates that the average amount of costly trade credit carried is $350,000. What is the firm's average accounts payable balance? Assume a 365-day year. Please explain process and show calculations.
Ally Corp's days sales in receivables is 35. The industry average days sales in receivables is 41. Which of the following is CORRECT? O a. The firm sells its entire inventory every 35 days. b. It takes an average of 35 days for the firm to collect cash from its sales. O c. The firm is not as effective as an average firm in the industry in managing its assets. O d. Other firms in the industry collect sales at a much faster rate than the firm. A Moving to another question will save this response
Vikrambhai
6. Michaels Corp. has a current accounts receivable balance of $623,410. Credit sales for the year just ended were $5,410,695. What is the receivables turnover? The days’ sales in receivables? How long did it take on average for credit customers to pay off their accounts during the past year?
Zane Corporation has an inventory conversion period of 79 days, an average collection period of 43 days, and a payables deferral period of 50 days. Assume 365 days in year for your calculations. What is the length of the cash conversion cycle? Round your answer to two decimal places. days If Zane's annual sales are $3,598,365 and all sales are on credit, what is the investment in accounts receivable? Do not round intermediate calculations. Round your answer to the nearest cent. $ How many times per year does Zane turn over its inventory? Assume that the cost of goods sold is 75% of sales. Use sales in the numerator to calculate the turnover ratio. Do not round intermediate calculations. Round your answer to two decimal places. times
Falafel Hut has sales of $512,630. The cost of goods sold is equal to 60 percent of sales. The beginning accounts receivable balance is $22,970, and the ending accounts receivable balance is $28,214. How long on average does it take the firm to collect its receivables?
Robie Co. operates 365 days in a year. Its receivable on the average remain uncollected for 73 days. Credit sales are P274,200. What is the average receivable?
The Caccamisse Corporation has annual credit sales of $35 million. The average collection period is 37 days. What is the average investment in accounts receivable as shown on the balance sheet? Assume 365 days per year. Note: Do not round intermediate calculations and enter your answer in dollars, not millions of dollars, rounded to 2 decimal places, e.g., 1,234,567.89.
A company reports the following: Sales $1,460,000 Average accounts receivable (net) 100,000 Determine (a) the accounts receivable turnover and (b) the number of days' sales in receivables. Round interim calculations to the nearest dollar and final answers to one decimal place. Assume a 365-day year. a. Accounts receivable turnover fill in the blank 1 b. Number of days' sales in receivables fill in the blank 2 days
If a firm has sales of $21,752,000 a year, and the average collection period for the industry is 45 days, what should this firm’s accounts receivable be if the firm is comparable to the industry? Assume there are 365 days in a year. Do not round intermediate calculations. Round your answer to the nearest dollar.

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