The following data are available for the Hunting Balloon Company: Sales for the current year $ 1,500,000 Cost of goods sold for the current year 1,200,000 Accounts receivable, beginning of year 140,000 Accounts receivable, end of year 160,000 The accounts receivable turnover ratio for the current year is______________.

The account receivable turnover ratio shows how well a business is managing its credit line it provided to its customers.It provides information on how well and effective a business is in the collection of amounts due from its credit customers in respect of credit sales made.

It is calculated using the formula below:

Account receivable turnover ratio (ARTR) =

Net credit sales/ Average account receivable

Average account receivable=

(Receivable balance at the begin. + Receivable balance at the end)/2

We can calculate the account receivable turnover for Hunting Ballon Company as follows:

Step 1

Calculate the average account receivable

= ($140,000+ $160,000)/2

= $150,000

Step 2

Work out the account receivable turnover ratio

Account receivable turnover ratio

= $1,500,000/$150,000

= 10

Account receivable turnover ratio= 10