Mikey Inc. designs, develops, markets, and sells athletic footwear, apparel, equipment, and accessories worldwide. Armer Inc. develops, markets, and distributes branded performance apparel, footwear, and accessories for men, women, and youth. The following financial information is reported by both companies. $ millions Accounts Receivable Year 3 Accounts Receivable Year 2 Accounts Receivable Year 2 Sales Year 3 Sales Year 2 Mikey Inc. $4,537.4 $3,358.0 $4,925.7 $45,326.4 $39,781.3 Armer Inc. 563.7 332.3 347.6 5,945.0 4,009.7 Required a. Compute the accounts receivable turnover ratio and the average days to collect receivables for year three and for year two for both Mikey Inc. and Armer Inc. Note: Round your answers to two decimal places. Accounts receivable turnover Year 3 Year 2 Mikey Inc. Answer Answer Armer Inc. Answer Answer Average days to collect receivables Year 3 Year 2 Mikey Inc. Answer Answer Armer Inc. Answer Answer b. Analyze the year-to-year results for both companies. Trends in Year 3 as compared to Year 2 for the Mikey Inc.indicate a Answer Indicated by the accounts receivable turnover ratio Answer Indicated by the average days to collect receivables These results indicate the following when comparing financial conditions of Year 2 to Year 3: Answer Trends in Year 3 as compared to Year 2 for Armer Inc. indicate a Answer Indicated by the accounts receivable turnover ratio Answer Indicated by the average days to collect receivables These results indicate the following when comparing financial conditions of Year 2 to Year 3: Answer Please answer all parts of the question.

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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Performing Ratio Analysis of Receivables and Interpreting the Results

Mikey Inc. designs, develops, markets, and sells athletic footwear, apparel, equipment, and accessories worldwide. Armer Inc. develops, markets, and distributes branded performance apparel, footwear, and accessories for men, women, and youth. The following financial information is reported by both companies.

$ millions	Accounts Receivable Year 3	Accounts Receivable Year 2	Accounts Receivable Year 2	Sales Year 3	Sales Year 2
Mikey Inc.	$4,537.4	$3,358.0	$4,925.7	$45,326.4	$39,781.3
Armer Inc.	563.7	332.3	347.6	5,945.0	4,009.7

Required

a. Compute the accounts receivable turnover ratio and the average days to collect receivables for year three and for year two for both Mikey Inc. and Armer Inc.

Note: Round your answers to two decimal places.

Accounts receivable turnover	Year 3	Year 2
Mikey Inc.	Answer	Answer
Armer Inc.	Answer	Answer

Average days to collect receivables	Year 3	Year 2
Mikey Inc.	Answer	Answer
Armer Inc.	Answer	Answer

b. Analyze the year-to-year results for both companies.

Trends in Year 3 as compared to Year 2 for the Mikey Inc.indicate a

Answer

Indicated by the accounts receivable turnover ratio

Answer

Indicated by the average days to collect receivables

These results indicate the following when comparing financial conditions of Year 2 to Year 3:

Answer

Trends in Year 3 as compared to Year 2 for Armer Inc. indicate a

Answer

Indicated by the accounts receivable turnover ratio

Answer

Indicated by the average days to collect receivables

These results indicate the following when comparing financial conditions of Year 2 to Year 3:

Answer

Please answer all parts of the question.

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