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ACCOUNTS RECEIVABLE ANALYSIS: What is the Days Sales Outstanding (DSO)? (1) Average accounts receivable is $1.2M and daily credit sales average $40K (2) Annual credit sales are $14.6M and accounts receivable is $1.2M

GMAT · 2022 · Data Insights
Question:
ACCOUNTS RECEIVABLE ANALYSIS: What is the Days Sales Outstanding (DSO)? (1) Average accounts receivable is $1.2M and daily credit sales average $40K (2) Annual credit sales are $14.6M and accounts receivable is $1.2M

Options

(A) Statement (1) ALONE is sufficient, but statement (2) alone is not sufficient
(B) Statement (2) ALONE is sufficient, but statement (1) alone is not sufficient
(C) BOTH statements TOGETHER are sufficient, but NEITHER statement ALONE is sufficient
(D) EACH statement ALONE is sufficient
(E) Statements (1) and (2) TOGETHER are NOT sufficient
Answer: (D) EACH statement ALONE is sufficient

Explanation:
Statement (1): DSO = $1.2M/$40K = 30 days. Sufficient. Statement (2): Daily sales = $14.6M/365 = $40K. DSO = $1.2M/$40K = 30 days. Sufficient.

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