# This ra o is a measure of how many mes old receivables

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Unformatted text preview: many -mes during a year a company is ‘turning over’ or collec-ng its receivables. This ra-o is a measure of how many -mes old receivables are collected and replaced by new receivables. Higher is beLer (the higher the number, the faster we are collec-ng cash from our customers). Accounts Receivable – Module 8 Assume that XYZ Company has beginning accounts receivable of \$35,000; ending accounts receivable of \$40,000; and net sales revenue of \$150,000 for 2005. Accts Receivable Turnover 4 times = = Net Sales Revenue ———————————— Average Accts Receivable \$150,000 (\$35,000 + \$40,000) ÷ 2 Accounts Receivable (AR)- Module 8 Pg 1 Accounts Receivable – Module 8 Assume that XYZ Company has beginning accounts receivable of \$35,000; ending accounts receivable of \$40,000; and net sales revenue of \$150,000 for 2005. Average Collection Period 91.25 days = = 365 ———————————— Accts Receivable Turnover 365 4 Accounts Receivable (AR)- Module 8 Pg 2...
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