(2-a) Compute accounts receivable turnover. 2-b) For each ratio, determine if it improved or worsened in the current year.
Bad Debts
At the end of the accounting period, a financial statement is prepared by every company, then at that time while preparing the financial statement, the company determines among its total receivable amount how much portion of receivables is collected by the company during that accounting period.
Accounts Receivable
The word “account receivable” means the payment is yet to be made for the work that is already done. Generally, each and every business sells its goods and services either in cash or in credit. So, when the goods are sold on credit account receivable arise which means the company is going to get the payment from its customer to whom the goods are sold on credit. Usually, the credit period may be for a very short period of time and in some rare cases it takes a year.

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Simon Company's year-end balance sheets follow.
At December 31
Assets
Cash
Accounts receivable, net
Merchandise inventory
Prepaid expenses
Plant assets, net
Total assets
Liabilities and Equity
Accounts payable
Long-term notes payable
Common stock, $10 par value
Retained earnings
Total liabilities and equity
For Year Ended December 31
Sales
Cost of goods sold
Other operating expenses
Current Year 1 Year Ago
$ 31,099
$ 26,605
89, 200
114,500
62,900
85,000
8,568
221, 258
8,163
209,503
$ 460, 131
$ 396,665
Interest expense
Income tax expense
Total costs and expenses
Net income
Earnings per share
$ 112,281
84,775
162,500
100,575
$ 460,131 $ 396,665
$ 65,696
89,408
162,500
79, 061
Current Year
The company's income statements for the current year and one year ago follow. Assume that all sales are on credit:
$364,884
185,433
10, 169
7,776
$598,170
2 Years Ago
568, 262
$ 29,908
$ 1.84
$ 32,725
50,800
58,000
3,636
192, 139
$ 337,300
$ 43,633
73,052
162,500
58,115
$ 337,300
1 Year Ago
$ 306,820
119,424
10,857
7,080
$ 472,031
444, 181
$ 27,850
$ 1.71](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fc5f2ec32-bb00-431c-981a-9196588026c3%2Fbac71099-e928-4389-9cfe-6ef0bde8764f%2Fsyso4ul_processed.png&w=3840&q=75)

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