The financial statements of M & J Company report net sales of $21 billion. Accounts receivable (net) are $2.9 billion at the beginning of the year and $3.3 billion at the end of the year. Compute 3M's receivables turnover ratio. Compute 3M's average collection period for accounts receivable in days. (Round turnover ratio to 1 decimal place, e.g. 10.5 and collection period to 0 decimal places, e.g. 125.)Accounts receivable turnover ratio ...............times Average collection period for accounts receivable .................. days
Welcome and thanks for your question!Accounts receivable turnover = Sales/Average receivablesAvg receivables - (2.9+3.3)/2=3.121/3.1 =6.8 timesAverage collection period - I'm giving it do with 360 days and 365 days, not sure what you needAvg receivables/sales * days3.1/21 * 360 = 53 days3.1/21 * 365 = 54 daysPlease let me know if you need any clarification.
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