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Calculate the average days to collect receivables

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Question - Hedgehog Manufacturing manufactures and markets many products you use every day. In 2019, sales for the company were $85,500 (all amounts in millions). The annual report did not report the amount of credit sales, so we will assume that all sales were on credit. The average gross profit percentage was 49.7 percent. Account balances for the year follow:

 

Beginning

Ending

Accounts receivable (net)

$6,400

$6,800

Inventory

7,180

7,200

Required -

1. Compute the turnover ratios for accounts receivable and inventory.

2. By dividing 365 by your ratios from requirement 1, calculate the average days to collect receivables and the average days to sell inventory.

Reference no: EM133153421

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