Accounts Receivable Turnover: The accounts receivable turnover ratio determines the efficiency of a company to use its assets and issue the credit to the customers and collects the funds from them. The accounts receivable turnover is determined by dividing the credit sales by the average accounts receivable of that accounting period. Average Collection Period: The average collection period refers to the average number of days which a company takes to collect the accounts receivable. The average collection period is determined by dividing the number of days in a year by the accounts receivable turnover. To compute: The receivables turnover ratio and the average collection period for Q1 and Q2.

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Chapter 7, Problem 7.25E

To determine

Accounts Receivable Turnover:

The accounts receivable turnover ratio determines the efficiency of a company to use its assets and issue the credit to the customers and collects the funds from them. The accounts receivable turnover is determined by dividing the credit sales by the average accounts receivable of that accounting period.

Average Collection Period:

The average collection period refers to the average number of days which a company takes to collect the accounts receivable. The average collection period is determined by dividing the number of days in a year by the accounts receivable turnover.

To compute: The receivables turnover ratio and the average collection period for Q1 and Q2.

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