Question

A company has net income of $195,000, a profit margin of 8.3 percent, and an accounts...

A company has net income of $195,000, a profit margin of 8.3 percent, and an accounts receivable balance of $134,370. Assuming 70 percent of sales are on credit, what is the company’s days’ sales in receivables? (Use 365 days a year. Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)

   

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Answer #1

Given:
Net Income = 195,000
Profit Margin = 8.3%
Credit Sales = 70%
Accounts Receivables = 134,370

To find: Company's days' sales in receivables.

Step 1: Find Total Sales

Step 2: Find credit sales

Step 3: Find average daily sales:

Step 4: Find Days' sales in receivables:

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