Question

Real World Financials ABC Corporation reported the following information in its financial statements for three successive...

Real World Financials

ABC Corporation reported the following information in its financial statements for three successive quarters ($ in millions):

Three Months Ended
9/30/2017 (Q1) 6/30/2017 (Q4) 3/31/2017 (Q3)
Balance sheets:
Accounts receivable, net $ 16,161 $ 19,815 $ 12,905
Income statements:
Sales revenue $ 24,555 $ 23,335 $ 22,130


Required:

Compute the receivables turnover ratio and the average collection period for Q1 and Q4. Assume that each quarter consists of 91 days. (Round average accounts receivable answers to nearest whole dollar. Enter your answers in millions. Round "Turnover ratio" answers to 3 decimal places.)

Receivables Turnover Ratio
Choose Numerator: / Choose Denominator: = Receivables Turnover Ratio
/ = Receivables turnover ratio
Q4 / = 0 times
Q1 / = 0 times
Average collection period
Choose Numerator: / Choose Denominator: = Average collection period
/ = Average collection period
Q4 / = 0 days
Q1 / = 0 days

Homework Answers

Answer #1
Receivables Turnover Ratio
Choose Numerator: / Choose Denominator: = Receivables Turnover Ratio
Net sales / Average accounts receivable (net) = Receivables turnover ratio
Q4 23335 / 16360 = 1.426 times
Q1 24555 / 17988 = 1.365 times
Average collection period
Choose Numerator: / Choose Denominator: = Average collection period
91 days / Receivables turnover ratio = Average collection period
Q4 91 / 1.426 = 63.81 days
Q1 91 / 1.365 = 66.67 days
Workings:
Average accounts receivable (net)
Q4 16360 =(12905+19815)/2
Q1 17988 =(19815+16161)/2
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