Powers Company Reported Net Sales of $1,200,000 and Average Accounts

question 58

Multiple Choice

Powers Company reported Net sales of $1,200,000 and average Accounts Receivable, net of $78,500. The accounts receivable turnover ratio is:

• A) 15.3 times.
• B) 16.3 times.
• C) 14.3 times.
• D) 28.6 times.
• E) 0.65 times.

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Definitions:

Gross Margin

The difference between sales revenue and the cost of goods sold, representing the profit before deducting operating expenses.

Accounts Receivable Turnover

A financial metric indicating how many times a business collects its average accounts receivable during a period, reflecting credit sales efficiency.

Average Collection Period

The average number of days it takes for a company to receive payment from its customers for invoices issued.

Inventory Turnover

A measure of how often a company sells and replaces its stock of goods within a certain period.