If Baxter Unlimited Has Annual Sales of $5,000,000 (80% on Credit)

question 126

Multiple Choice

If Baxter Unlimited has annual sales of $5,000,000 (80% on credit) , and receivables equal to 35% of credit sales, what is its receivables turnover?

• A) 3.6 times
• B) 2.9 times
• C) 2.3 times
• D) 7.9 times

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Definitions:

Explicit Costs

Directly incurred expenses in the operation of a business, such as wages, rent, and material costs, which are clearly accounted for and easy to identify.

Opportunity Costs

The potential benefits missed out on when choosing one alternative over another.

Explicit Costs

Direct, out-of-pocket payments for goods or services that are made by a business as part of its operations.

Total Economic Costs

The sum of all costs associated with the production of a good or service, including both explicit (direct) costs and implicit (indirect or opportunity) costs.