For Powers Company, the accounts receivable turnover ratio is 20.8%.
What Is Turnover Ratio?
- The turnover proportion or turnover rate is the rate of a common finance or other portfolio's possessions that have been supplanted in a given year (calendar year or whichever 12-month period speaks to the fund's financial year).
- Higher turnover rates cruel expanded support costs, which can diminish the fund's in general execution.
- Higher turnover rates can moreover have negative assess results. Reserves with higher turnover rates are more likely to bring about capital picks up charges, which are at that point conveyed to financial specialists.
How do I calculate the turnover ratio?
The given data is,
Net sales =$1,340,000
Average accounts receivable=$64,500
Net income=$56,975
Turnover ratio= Net sales/ Average accounts receivable
=1,340,000/64,500
=20.8 times.
For Powers Company, the accounts receivable turnover ratio is 20.8%.
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