Chapter 13, Problem 15Q

To determine

Accounts receivable ratio: This ratio is mainly used to evaluate the collection process efficiency. It helps the company to know the number of times the accounts receivable is collected in a particular time period. Main purpose of accounts receivable turnover ratio is to manage the working capital of the company.

Formula:

$\begin{array}{l}\text{Accounts receivables}\\ \text{ turnover ratio}\end{array}\}=\frac{\text{Net credit sales}}{\text{Average accounts receivables}}$

To determine: The collection problem related to accounts receivable.

Given info: Accounts receivable turnover ratio and industry average