Answer:
Average collection period = 22.70 days
correct option is a 26.91 days
Explanation:
given data
receivables = $38,100
total assets = $523,700
total asset turnover rate = 1.17
profit margin = 7.3 percent
solution
we know that Total Asset turnover ratio = Sales ÷ Total assets
so here sale will be
sales = (523700 × 1.17)
sales = $612729
and
Profit will be = 7.3% × $ 612729
profit = $44729.217
so that accounts receivable turnover is here
accounts receivable turnover = Sales ÷ Accounts receivable
so
accounts receivable turnover = [tex]\frac{612729}{38100}[/tex]
accounts receivable turnover = 16.08
and
Average collection period = [tex]\frac{365}{16.08}[/tex]
Average collection period = 22.70 days
correct option is a 26.91 days
