Answer: Figures are not in millions ('000)
Explanation:
Formula
Receivable turnover ratio(RTR)= Net credit sales/Average account receivable
Where average account receivable((AAR)
AAR=opening receivable+closing receivable/2
Average collection period=365/Receivable turnover ratio
WALCO
Average receivable=1785+2732/2
AAR=4517/2
AAR=$2258.5
Turnover ratio=319427/2258.5
Receivable turnover ratio=141.43 times
ACP=365/141.43
Average collection period=2.58 days
TARMART
Average receivable=6016+6544/2
AAR=12560/2
AAR=$6280
Turnover ratio=64878/6280
Receivable turnover ratio=10.33 times
ACP=365/10.33
Average collection period=35.34 days
COSTGET
Average receivable=599+635/2
AAR=1234/2
AAR=617
Turnover ratio=65963/617
Receivable turnover ratio=106.87 times
ACP=365/106.87
Average collection period=3.42 days
Average collection period is the number of days it takes for credit sales to be paid.
The receivables turnover ratio and the average collection period for Walco: 141.43 times;2.58 days.
WALCO
Average receivable=1785+2732/2
Average account receivable=4517/2
Average account receivable=$2258.5
Receivable turnover ratio=319427/2258.5
Receivable turnover ratio=141.43 times
Average collection period =365/141.43
Average collection period=2.58 days
TARMART
Average receivable=6016+6544/2
Average receivable=12560/2
Average receivable=$6280
Receivable turnover ratio=64878/6280
Receivable turnover ratio=10.33 times
Average collection period=365/10.33
Average collection period=35.34 days
COSTGET
Average receivable=599+635/2
Average receivable=1234/2
Average receivable=617
Receivable turnover ratio=65963/617
Receivable turnover ratio=106.87 times
Average collection period=365/106.87
Average collection period=3.42 days
Inconclusion the receivables turnover ratio and the average collection period for Walco: 141.43 times;2.58 days
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