Chapter 9, Problem 17QS

To determine

Concept Introduction:

Accounts receivable turnover ratio:

This is an efficiency ratio that indicates the conversion of accounts receivable into cash. This ratio is calculated by dividing the Net credit Sales by the Average accounts receivable. The formula to calculate this ratio is as follows:

  $Accountsreceivableturnoverratio= \frac{NetcreditSales}{Averageaccountsreceivable}$

Days Sales uncollected:

This is an efficiency ratio that indicates the period for which credit sales remain as receivable. The ratio is calculated by multiplying Accounts receivable with 365 days and dividing the result by Net Sales. The formula for Days Sales uncollected is as follows:

  $DaysSalesuncollected=\frac{AccountsReceivable*365}{NetSales}$

To calculate:

The Accounts receivable turnover ratio for Ruggers Company for the current year and its interpretation