FINANCE HOMEWORK HELP...

 The average collection period is calculated by dividing 365 days in a year by the receivables turnover ratio.  Both of these ratios are reviewed by investors and creditors.,

 

When a credit sale is made, the sale is recorded as revenue and the accounts receivable is recorded as an asset.  When the customer remits payment for the receivable, cash is recorded. If the customer does not do pay the amount billed, less cash is available to use in the daily business operations.   A creditor and investor look at the receivables turnover ratio to determine the number of times receivables are collected during the accounting period.  The company's collection policies and procedures impact the liquidity of receivables.  "Investors simply like to see that the company can cover its spending with cash from operations, without having to turn to financing" ("Financial statement analysis 101: Cash flow statement," 2010).  As illustrated in Chapter 13, the dollar amount for the average net receivables is the denominator in formula to compute the receivables turnover.

 

Class -  Any ideas (not posted by another student) why the dollar amount for average receivables is used instead of the dollar amount that appears for accounts receivable on the balance sheet?  

References

 

Financial statement analysis 101: Cash flow statement. (2010). IOMA's Report on Managing Credit, Receivables & Collections, 10(10), 10-12. Retrieved from  http://search.proquest.com/docview/762997608?accountid=35812

 

Kimmel, P. D. (2013). Financial accounting: Tools for business decision making. Retrieved from University of Phoenix eBook Collection.

Needs to be written up like a note or a discussion/conversation (NOT) a report.

100 to 200 words.

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Reference(s) cited source(s).

Answer questions in order.

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Due date is today 4/15/15 in 6 hours on or before preferred.

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