ACCA FA · Chapter 14 · Question 2 of 10
A company has trade receivables of $62,000 at its year end. Its revenue, all on credit, is $520,000, and its cost of sales is $390,000. What are its trade receivables collection days, to the nearest day (using a 365-day year)?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: C) 44 days
Explanation
Receivables days = trade receivables / credit sales x 365 = $62,000 / $520,000 x 365 = 43.5, which rounds to 44 days. Using cost of sales instead of revenue gives 58 days, which is incorrect because receivables are stated at selling price. 8 is the receivables turnover in times, not days.
More Interpretation of financial statements MCQs
- Q4A company has profit before interest and tax of $90,000, equity of $400,000 and 9% loan notes (non-current) of $200,000. What is its…
- Q5A company has equity of $400,000 and non-current borrowings of $200,000. What is its gearing, calculated as debt / (debt + equity)?
- Q6A company has profit before interest and tax of $90,000 and finance costs of $18,000. What is its interest cover?
- Q7A company has closing inventory of $45,000, opening inventory of $39,000, cost of sales of $300,000 and revenue of $400,000. What are its…
- Q8A company's trade receivables collection period has increased from 35 days to 52 days. Which of the following is the most likely…