At the end of the fiscal year, Big Box Depot had account receivables of $1.89 billion on net sales of $8.5 billion. At the same point in time, Lumber Jack Inc. had accounts receivable of $6.3 billion on net sales of $9.2 billion. Each company had cash on hand of $600,000. Calculate the accounts receivable turnover and days' sales outstanding (DSO) for each company. Based solely on these metrics, which company reported stronger financial metrics. Explain.
At the end of the fiscal year, Big Box Depot had account receivables of $1.89 billion on net sales of $8.5 billion. At the same point in time, Lumber Jack Inc. had accounts receivable of $6.3 billion on net sales of $9.2 billion. Each company had cash on hand of $600,000. Calculate the accounts receivable turnover and days' sales outstanding (DSO) for each company. Based solely on these metrics, which company reported stronger financial metrics. Explain.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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At the end of the fiscal year, Big Box Depot had account receivables of $1.89 billion on net sales of $8.5 billion. At the same point in time, Lumber Jack Inc. had
- Calculate the accounts receivable turnover and days' sales outstanding (DSO) for each company.
- Based solely on these metrics, which company reported stronger financial metrics. Explain.
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