Question

A company has net income of $193,000, a profit margin of 9.3 percent, and an accounts...

A company has net income of $193,000, a profit margin of 9.3 percent, and an accounts receivable balance of $132,370. Assuming 70 percent of sales are on credit, what is the company’s days’ sales in receivables? Use 365 days a year

10.97

70

33.26

35.52
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Homework Answers

Answer #1

33.26

Working:

Total sales = Net Income / Profit margin
= $    1,93,000.00 / 9.30%
= $ 20,75,268.82
Credit sales = $ 20,75,268.82 * 70%
= $ 14,52,688.17
Accounts receivable turnover = Credit Sales / Accounts receivable
= $ 14,52,688.17 / $ 1,32,370.00
=                    10.97
Days sales in receivable = Days in a year / Accounts receivable turnover
= 365 /                 10.97
= 33.26
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