|Author||Topic: a receivable turnover question|
|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?
|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.|
|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.
CFA Discussion Topic: a receivable turnover question
I am happy to say that I passed! Your study notes certainly helped prepare me for what was the most difficult exam I had ever taken.