Question Content Area Accounts Receivable Analysis Xavier Stores Company and Lestrade Stores Inc. are large retail department stores. Both companies offer credit to their customers through their own credit card operations. Information from the financial statements for both companies for two recent years is as follows (in millions): Xavier Lestrade Sales $8,500,000 $4,585,000 Credit card receivables-beginning 820,000 600,000 Credit card receviables-ending 880,000 710,000 a. Determine the (1) accounts receivable turnover and (2) the number of days' sales in receivables for both companies. Round your calculations and answers to one decimal place. Assume 365 days a year. Xavier Lestrade 1. Accounts receivable turnover fill in the blank 1 fill in the blank 2 2. Number of days' sales in receivables fill in the blank 3 days fill in the blank 4 days b. Fill in the blank: Xavier's accounts receivable turnover is much 1)_____ than Lestrade's. The number of days' sales in receivables is 2)______ for Xavier than for Lestrade. These differences indicate that Xavier is able to turn over its receivables 3)______ quickly than Lestrade. As a result, it takes Xavier 4)______time to collect its receivables. 1) higher or lower ? 2) higher or lower ? 3) more or less ?
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Question Content Area
Accounts Receivable AnalysisXavier Stores Company and Lestrade Stores Inc. are large retail department stores. Both companies offer credit to their customers through their own credit card operations. Information from the financial statements for both companies for two recent years is as follows (in millions):
Xavier Lestrade Sales $8,500,000 $4,585,000 Credit card receivables-beginning 820,000 600,000 Credit card receviables-ending 880,000 710,000 a. Determine the (1) accounts receivable turnover and (2) the number of days' sales in receivables for both companies. Round your calculations and answers to one decimal place. Assume 365 days a year.
Xavier Lestrade 1. Accounts receivable turnover fill in the blank 1 fill in the blank 2 2. Number of days' sales in receivables fill in the blank 3 days fill in the blank 4 days b. Fill in the blank: Xavier's accounts receivable turnover is much 1)_____ than Lestrade's. The number of days' sales in receivables is 2)______ for Xavier than for Lestrade. These differences indicate that Xavier is able to turn over its receivables 3)______ quickly than Lestrade. As a result, it takes Xavier 4)______time to collect its receivables.
1) higher or lower ?
2) higher or lower ?
3) more or less ?
4) more or less ?
Introduction:-
Accounts Receivable turnover is an efficiency ratio which indicates the number of times a company was able to collect credit sales during a year. The ratio is calculated by dividing sales by average receivables.
Accounts Receivable days are calculated by dividing 365 by the account receivable days. The accounts receivable days reports the average number of days it takes a company to convert credit sales to cash.
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