Use the Information Below to Answer the Following Questions

question 40

Multiple Choice

Use the information below to answer the following questions:
Alda Ltd’s average trade debtors for year ended 30 June 2012 was $150 000. Cost of goods sold was $382 500 and the gross margin was 15%. All sales are made on credit.
-What was the accounts receivable turnover?

• A) 2.93 times p.a.
• B) 2.55 times p.a.
• C) it cannot be determined from the information provided
• D) 3 times p.a.

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Definitions:

Accounts Receivable Turnover

A financial metric that measures how many times a company collects its average accounts receivable in a period, indicating the efficiency of extending credit and collecting debts.

Average Accounts Receivable

The average amount of money owed to a company by its customers for goods or services provided on credit over a specified period.

Inventory Turnover Ratio

A measure of how quickly a company sells and replaces its stock of goods within a given period.

Cost of Goods Sold

The total cost of materials and labor directly involved in producing goods or services sold during a period.