Financial ratios in the forecasting process

Rouster and Sideways Corp. currently has $620,000 in accounts receivable and generated $4,350,000 in sales (all on credit) during the year that just ended. The firms days sales outstanding (DSO) is days. Use 365 days as the length of a year in all calculations.

Rouster and Sideways Corp.s CFO is unhappy with its DSO and wants to improve collections next year. Sales are expected to grow by 13% next year, and the CFO wants to lower the DSO to the industry average of 30 days. How much accounts receivable is the firm expected to carry?

$404,014

$525,218

$424,215

$383,813