Question

Use the table for the​ question(s) below. Luther Industries had sales of​ $980 million and a cost of goods sold of​ $560 million in 2006. A simplified balance sheet for the firm appears​ below: Luther Industries Balance Sheet As of December​ 31, 2006 ​ (millions of​ dollars) Assets Liabilities and Equity Cash 25 Accounts payable 60 Accounts receivable 85 Notes payable 425 Inventory 90 Accruals 45 Total current assets 200 Total current liabilities 530 Net​ plant, property, and equipment 6100 Long term debt 2725 Total assets 6300 Total liabilities 3255 Common equity 3045 Total liabilities and equity 6300 ​Luther's Accounts Receivable days is closest to​ ________. A. 42 days B. 59 days C. 32 days D. 39 days

Answer 1

Receivables turnover = Credit sales/receivables

Receivables turnover = 980/85

Receivables turnover = 11.53

days of sales outstanding = number of days in a year/receivables turnover

days of sales outstanding = 365/11.53

days of sales outstanding = 32