High School

ACP and Receivables Turnover

Benton, Incorporated, has an average collection period of 56 days. Its average daily investment in receivables is $69,800. What is the receivables turnover?

Answer :

Final answer:

The receivables turnover cannot be determined without knowing the net credit sales.

Explanation:

To calculate the receivables turnover, we need to use the formula:

Receivables Turnover = Net Credit Sales / Average Accounts Receivable

In this case, the given information is:

  • Average collection period: 56 days
  • Average daily investment in receivables: $69,800

First, we need to calculate the average accounts receivable. Since the average daily investment in receivables is given, we can multiply it by the average collection period:

Average Accounts Receivable = Average Daily Investment in Receivables x Average Collection Period

Average Accounts Receivable = $69,800 x 56

Next, we need to calculate the net credit sales. Unfortunately, the net credit sales information is not provided in the question. Without this information, we cannot calculate the receivables turnover.

Therefore, we cannot determine the receivables turnover without knowing the net credit sales.

Learn more about calculating receivables turnover here:

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