Receivable collection period

This topic has 3 replies, 3 voices, and was last updated 11 years ago by John Moffat.

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March 24, 2015 at 1:08 pm #238582
arijeta
Participant
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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
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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
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Thanks
March 24, 2015 at 5:10 pm #238603
John Moffat
Keymaster
- Topics: 57
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Arijeta: Dina’s answer is correct 🙂
Dina: Thanks for answering although this is the Ask the Tutor Forum 🙂
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