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- Topic: a receivable turnover question
| Author | Topic: a receivable turnover question |
|---|---|
| mtyj12345 @2016-12-29 13:34:29 |
Hello, I got a question on reading # 33 (FRA) on the CFA book. For question #2 it states that Galabos Corp average receivable collection period is 19 days. Wouldn't that be the receivable turn over? Why did they make 19 days the days of sales outstanding? Thank You. |
| sohon @2016-12-30 15:40:00 |
Receivable collection period is 365/receivable turnover. 365/19 = 19.2. So if the receivables turnover is 19, the number of days of receivables is about 19 days. Coincidence. |
| mtyj12345 @2017-01-01 02:57:15 |
Thank you both for the answer. I wasn't sure if I could post the full question here, (dont remember if that is against the CFA code of ethics). For some reason I kept thinking average receivable collection period is the Receivable turnover. So I kept going over the equation, and I wasn't sure why they made average receivable collection period the days sales outstanding. Now that I am going back over it, along with your answer, it is clear. Thank ya |
