I have to find the accounts receivable turnover and the avg. collection period. I know that it is sales revenue/ average accounts receivable. This is the information I am given.. I have to find it for both 2005 & 2006. Could someone let me know if this is correct.
2005 2006
Net sales………………………………………….. $1,425,000 $1,650,000

Net Receivables
Beginning of year…………………………………. $375,000 333,500
End of year………………………………………… $420,000 375,000


2005

1,425,000 / 420,000 = 3.40 or do I add the 375,00 and the 420,000
365/ 3.40 = 107.35 for the avg. collection period

1,650,000/375,000 = 4.4
365/4.4 =82.95 for the avg. collection period

Am I on the right track or completley off? Thanks.

to compute average account recievable you add the beginning and ending acct rec balances and divide by 2 then take the net sales and divide it by that number according to the accounting book that I have

1425000/39750= 35.85 days for average collection period