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Receivable collection period

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FM Exams › Receivable collection period

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  • March 24, 2015 at 1:08 pm #238582
    arijeta
    Participant
    • Topics: 3
    • Replies: 3
    • ☆

    Hello

    Can you please provide me with the solution of the problem

    JAM Co has inventory of $1M, cash of $0.5M, and current liabilities of $2.5M.
    They have sales of $50M, and a current ratio of 2.4.
    What is receivable collection period.

    Thank you

    March 24, 2015 at 3:51 pm #238593
    dina
    Member
    • Topics: 0
    • Replies: 1
    • ☆

    hi, Arijeta,

    it is:

    CL=CA/CL=2.4, CA=Inv +cash+receivables; so 2.4=(1+0,5+receivables)/2.5
    6=1,5+receivables, receivables=4,5.

    Receivales collection period=4,5/50*365=32,85 days

    March 24, 2015 at 3:57 pm #238594
    arijeta
    Participant
    • Topics: 3
    • Replies: 3
    • ☆

    Thanks

    March 24, 2015 at 5:10 pm #238603
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54446
    • ☆☆☆☆☆

    Arijeta: Dina’s answer is correct 🙂

    Dina: Thanks for answering although this is the Ask the Tutor Forum 🙂

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