Question
Baker Brothers has a DSO of 40 days, and its annual sales are 7,300,000
Baker Brothers has a DSO of 40 days, and its annual sales are 7,300,000. What is its accounts recievable balance? Assume it uses a 365-day year.
Answers
Given:
DSO = 40, Annual Sales = $ 7,300,000, Days in an year = 365
DSO = Accounts Receivable / Sales per day
Sales per day = Annual sales / No. of days in an year
= $ 7,300,000 / 365 = 20,000
DSO = Accounts Receivable / 20000
40 = Accounts Receivable / 20000
Accounts Receivable = 40*20000
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