211c7m8 - Introduction to Financial Accounting Chapter 7...

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Introduction to Financial Accounting AMIS 211 – Professor Marc Smith 1 Chapter 7, Module 8 Chapter 7, Module 8 Slide 1 AMIS 211 Introduction to Financial Accounting Professor Marc Smith Chapter Chapter 7 Module Module 8 Hi everyone. Welcome back. Let’s wrap up our discussion of Accounts Receivable by talking about a couple of financial statement ratios that relate to the Receivables. Let’s jump right into it. Please go to the next slide with me.
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Introduction to Financial Accounting AMIS 211 – Professor Marc Smith 2 Chapter 7, Module 8 Slide 2 Financial Statement Ratios Relating to Accounts Receivable: Receivable: 1. Accounts Receivable Turnover Accounts Receivable Turnover 2. Average Collection Period Average Collection Period Chapter 7 Module 8: Accts Receivable Ratios And, there are two financial statement ratios relating to Accounts Receivable that I would like to talk about. Let’s talk about what is called: the Accounts Receivable Turnover Ratio and what is called: the Average Collection Period. Let’s go ahead to the next slide.
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Introduction to Financial Accounting AMIS 211 – Professor Marc Smith 3 Chapter 7, Module 8 Slide 3 Accounts Receivable Turnover Measures the number of times on average the company collects its accounts receivable. Net Sales Revenue Average Accts Receivable = Accounts Receivable Turnover Accts Receivable at Jan. 1 + Accts Receivable at Dec. 31 2 = Average Accts Receivable Chapter 7 Module 8: Accts Receivable Turnover And, let’s deal with the Accounts Receivable Turnover Ratio. This ratio measures the number of times—on average—the company is able to collect its Accounts Receivable during the year. To calculate the Accounts Receivable Turnover Ratio, you take your Net Sales Revenue and divide it (/) by your Average Accounts Receivable balance.
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This note was uploaded on 04/21/2008 for the course ACCT 211m taught by Professor Zeigler/smith during the Winter '07 term at Ohio State.

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211c7m8 - Introduction to Financial Accounting Chapter 7...

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