CFA Practice Question

There are 120 practice questions for this study session.

CFA Practice Question

For the year just ended, James' Drafting Supplies had average accounts receivable of $880,000 from total credit sales of $4,800,000 for the year. Throughout the year, a factor purchased accounts receivable from the firm at a 2 percent discount. What was the firm's accounts receivable period?
A. 67 days
B. 71 days
C. 75 days
Explanation: What is the receivables turnover rate? 4800000/880000 = 5.4545. Then 365/5.4545 = 67. The fact that the receivables are factored here does not impact the firm's sales in receivables.

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