The initial analysis should include the following:The ratio equationThe calculation of the ratio using the equation and the pre-assigned Quick Study or Exercise from the textbook. Use the result in a sentence; i.e. For every dollar invested in assets the company is earning 22.4 cents or 22.4% in net income. Then explain whether this is a good result or a result that needs improving.The original post should include at least 7 sentences **Exercise 8-15: Liquid Assets and Accounts Receivable**Barga Co.’s net sales for Year 1 and Year 2 are $730,000 and $1,095,000, respectively. Its year-end balances of accounts receivable are as follows: - Year 1: $65,000- Year 2: $123,0001. **a. Compute its days’ sales uncollected at the end of each year.** - Round the number of days to one decimal.2. **b. Did days’ sales uncollected improve or worsen in Year 2 versus Year 1?**

Days sales uncollected is a liquidity ratio. It measures the estimated number of days before receivables will be collected. It is actually the number of days within which the company will receive the cash for its credit sales. It is calculated by dividing average account receivables by net credit sales and then multiplied by the number of days in the year. Days sales uncollected = Account ReceivablesNet sales × 365 For year 1 Account receivables = 65,000 Net sales = $730,000 Days sales uncollected = 65,000730,000 × 365 = 0.089 × 365 = 32.49 ~ 32 days. For year 2 Account receivables = $123,000 Net sales = $1,095,000 Days sales uncollected = 123,0001,095,000 × 365 = 0.11 × 365 = 40.15 ~ 40 days. b). The days sales uncollected has worsened in year 2 compared to year 1. In year 1, it was 32 days while in year 2 it has increased to 40 days.

Answered: Barga Co.'s net sales for Year 1 and…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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The initial analysis should include the following:

The ratio equation
The calculation of the ratio using the equation and the pre-assigned Quick Study or Exercise from the textbook.
Use the result in a sentence; i.e. For every dollar invested in assets the company is earning 22.4 cents or 22.4% in net income.
Then explain whether this is a good result or a result that needs improving.
The original post should include at least 7 sentences

**Exercise 8-15: Liquid Assets and Accounts Receivable**

Barga Co.’s net sales for Year 1 and Year 2 are $730,000 and $1,095,000, respectively. Its year-end balances of accounts receivable are as follows:
- Year 1: $65,000
- Year 2: $123,000

1. **a. Compute its days’ sales uncollected at the end of each year.**
- Round the number of days to one decimal.

2. **b. Did days’ sales uncollected improve or worsen in Year 2 versus Year 1?**

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