Accounts Receivable Turnover Ratio? (1 Viewer)

[taco man]

im getting conflicting info on the accounts receivable turnover ratio from my textbook and a sheet handout. Can somebody clear things up for me plz.
I'm not sure if credit sales is the same as acc receivable

Textbook
Acounts Receivable/Av Sales Per Day
eg: =35 which means it takes it take 35 days on average to collect accounts receivable

Handout
Credit Sales/Av Sales Per Day
eg=35 which means accounts are returned 35 times a yr so 365/35 it takes10 days on avaerage to collect accounts receivable

thanks

 

[~SeXcSuM~]

yep its the same thing

 

[taco man]

are u sure?? the eg's they give are diff

 

[barnsey88]

Acc Rec turnover ratio is not in syllabus, it is in my textbook, but apparently you dont need to know it.

 

[skyrockets1530]

Acc Rec turnover ratio is not in syllabus, it is in my textbook, but apparently you dont need to know it.

yea, its in the syllabus- thus you have to know it- its even come up before in past hscs

Its listed under types of financial ratios by efficiency
AR Turner = 365 / (Revenue / AR)

 

[barnsey88]

ohh sorry, im thinking of inventory turnover ratio

 

[taco man]

thx v much

 

[goan_crazy]

im getting conflicting info on the accounts receivable turnover ratio from my textbook and a sheet handout. Can somebody clear things up for me plz.
I'm not sure if credit sales is the same as acc receivable

Textbook
Acounts Receivable/Av Sales Per Day
eg: =35 which means it takes it take 35 days on average to collect accounts receivable

Handout
Credit Sales/Av Sales Per Day
eg=35 which means accounts are returned 35 times a yr so 365/35 it takes10 days on avaerage to collect accounts receivable

thanks

I use
Credit Sales/Av Sales Per Day

 

[hYperTrOphY]

im getting conflicting info on the accounts receivable turnover ratio from my textbook and a sheet handout. Can somebody clear things up for me plz.
I'm not sure if credit sales is the same as acc receivable

Textbook
Acounts Receivable/Av Sales Per Day
eg: =35 which means it takes it take 35 days on average to collect accounts receivable

Handout
Credit Sales/Av Sales Per Day
eg=35 which means accounts are returned 35 times a yr so 365/35 it takes10 days on avaerage to collect accounts receivable

thanks

I use Sales (credit)/Accounts receivables

EDIT: Are you sure the textbook says Acounts Receivable/Av Sales Per Day and not the other way around?

 

[Owyn]

the problem is the board wont release offical ones because then someone will come along and point out there wrong, so instead that let the textbooks make up a ratio and we get screwed over.

My book says:

Accounts Recievable
------------------------
Daily sales

 

[taco man]

I use Sales (credit)/Accounts receivables

EDIT: Are you sure the textbook says Acounts Receivable/Av Sales Per Day and not the other way around?

yep im 100% sure its the Sykes, Hansen, Codsi textbook

 

[Owyn]

Handout
Credit Sales/Av Sales Per Day
eg=35 which means accounts are returned 35 times a yr so 365/35 it takes10 days on avaerage to collect accounts receivable

thanks

I think you must have misread or they miswrote this, because your formula works, but your using the number wrong, 35 in this case would be the days, not how many times it is collected.

 

[taco man]

I think you must have misread or they miswrote this, because your formula works, but your using the number wrong, 35 in this case would be the days, not how many times it is collected.

Im not sure, apparently the answer that the formula gives is the amount of times accounts receivable is turned over each yr not the amount of days each yr. The eg i put there was mine, I'll give u the eg on the sheet:
$72,000/$5,000=14.4
365/14.4=25.4days

 

[karen88]

i was always told that it was credit sales/accounts receivable

 

[Owyn]

On reflection, I am positive, I personnally have no doubt in my mind that the formula is not talking about amount of times per year.

Daily sales = Sales/365

Ratio - accounts recievble/daily sales

Ive thought it through, it makes sense. Maybe yours does too, but that have different answers so i dobut it.

 

[hYperTrOphY]

The Heineman textbook states:

Accounts receivable turnover ratio =

Credit sales
---------------
Accounts receivable

This ratio measures how long it takes for the business to 'turn over' its accounts receivables - that is, how long it takes to collect money from creditors. Once the ratio has been found it is used to divide up the 365 days of the year to give the average collection period. Improvements in cash flow can be achieved by decreasing this collection period.

 

[fugazi]

AC turnover = sales/accounts receivable.
/365.

 

[~SeXcSuM~]

AC turnover = sales/accounts receivable.
/365.

yep thats the one i have ^^^

 

[seremify007]

My notes say "Sales/Acc. Rec", and then to get the Days to collect it's 365 divided by that figure.

 

[taco man]

I think its best u use the formula u were taught/familiar with. I rekon the markers would cut u sum slack since everyone seems to have a different formula or else u could just ring the helpline.