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For the average manufacturing firm, accounts receivable are about what share of total assets?
AAbout 5 to 8 percent
BAbout 15 to 20 percent
CAbout 30 to 35 percent
DAbout 45 to 50 percent
Answer & Solution
Correct answer: B. About 15 to 20 percent
1. Accounts receivable represent sales for which the firm has not yet been paid.
2. Because the product has gone out but the cash has not come in, receivables are a use of funds.
3. For the average manufacturing firm they are about 15 to 20 percent of total assets.
4. Inventory sits at a similar weight, nearly 20 percent of total assets in a typical manufacturing firm, so the two together tie up a large slice of the balance sheet.
_Source: OpenStax Introduction to Business (CC BY 4.0), Ch 16 "Understanding Financial Management and Securities Markets", section 16.2 How Organizations Use Funds_
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