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Universal Sports Supply began the year with an accounts receivable balance of $130,000 and a year-end balance of $150,000. Credit sales of $645,000 generate a gross profit of $215,000. Calculate the receivables turnover ratio for the year. (Round your final answer to 1 decimal place.)

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tutordamola

Answer:

The answer is 4.6

Explanation:

The formula for receivable turnover equals:

Net sales (credit sales) ÷ average accounts receivable

Average accounts receivable =

($130,000 + $150,000) ÷ 2

$280,000 ÷ 2

= $140,000

Therefore, receivables turnover ratio is

$645,000/$140,000

= 4.6

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