Use the following information to answer this question. Windswept, Inc. 2010 Inco
ID: 1171384 • Letter: U
Question
Use the following information to answer this question. Windswept, Inc. 2010 Income Statement ($ in millions) Net sales Less: Cost of goods sold Less: Depreciation Earnings before interest and taxes Less: Interest paid Taxable Income Less: Taxes Net income $8,650 7,340 410 $900 $812 284 $ 528 Windswept, Inc. 2009 and 2010 Balance Sheets ($ in millions) 2009 2009 2010 2010 140$170 Accounts payable $1,030$1,135 1,265 3,200 2,930 770 Cash 720 Long-term debt 1,550 Common stock 1,030 820 1,550 ccounts rec. Inventory $2,510 2,440 Retained earnings 520 otal Net fixed assets Total assets 3,270 3,660 $5,7806,100Total liab.&equity; 5,780$ 6,100 What is the days' sales in receivables? (use 2010 values) O 43.08 days 32.49 days O 29.97 days 30.38 days O 56.44 daysExplanation / Answer
Solution
Answer is 30.38days
Accounts receivables turnover ratio : Sales / Accounts Receivable
Day's Sales in receivables : 365 days / Accounts receivables turnover ratio.
It gives an insight into number of days a company takes to collect its receivables.
As per the above Question using 2010 Values:
Account Receivables turnover ratio : 8650 / 720 = 12.014
Therefore, Day's Sales in receivables will be : 365 / 12.014
: 30.38 days