High School

Benton, Incorporated, has an average collection period of 24 days. Its average daily investment in receivables is $49,300.

What is the receivables turnover?

Answer :

Final answer:

The receivables turnover for Benton, Incorporated is 15.21, which means the company collects its average accounts receivable about 15 times per year.

Explanation:

The question refers to the calculation of the receivables turnover for Benton, Incorporated. This ratio measures how many times, on average, a company collects its average accounts receivable during a period. It is used to assess the effectiveness of the company's credit and collection efforts.

The formula to calculate receivables turnover is:

Total Sales / Average Accounts Receivable.

However, in your case, you are given the information in a different way - average collection period and average daily investment in receivables - and you are to find the receivables turnover.

So, we need to adjust the formula a bit accordingly:

Receivables Turnover = 365 / Average Collection Period

Let's plug the values in:

Receivables Turnover = 365 / 24 = 15.21

This means Benton Incorporated collects its receivables 15.21 times per year on average.

Learn more about Receivables Turnover here:

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