Jessica's sports wear has $38,100 in receivables and $523,700 in total assets. the total asset turnover rate is 1.17 and the profit margin is 7.3 percent. how long on average does it take to collect the receivables? assume a 365-day year.26.91 days19.45 days11.68 days31.07 days22.70 days

Average collection period =  22.70 days

correct option is a 26.91 days

Explanation:

given data

receivables = $38,100

total assets = $523,700

total asset turnover rate = 1.17

profit margin = 7.3 percent

solution

we know that Total Asset turnover ratio = Sales ÷ Total assets

so here sale will be

sales = (523700 × 1.17)

sales = $612729

and

Profit will be  =  7.3% × $ 612729

profit =  $44729.217

so that accounts receivable turnover is here

accounts receivable turnover = Sales  ÷ Accounts receivable

so

accounts receivable turnover  =

accounts receivable turnover  = 16.08

and

Average collection period =

Average collection period =  22.70 days

correct option is a 26.91 days

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