CFA Level I · CFA Level I Exam · Financial Analysis Techniques
A company reports annual credit sales of 3,650,000 and average accounts receivable of 300,000. Using a 365-day year, the company's days of sales outstanding is closest to:
Days of sales outstanding equals average receivables divided by credit sales, times 365. That is 300,000 divided by 3,650,000 times 365, which gives 30 days.
- A30 days
- B37 daysCorrect
- C46 days
Explanation
Receivables turnover = 3,650,000 / 300,000 = 12.17 times. DSO = 365 / 12.17 = 30 days... check: 300,000 / 3,650,000 x 365 = 30 days. So 30 days is correct; the key must be A.
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