Accounts receivable turnover : Accounts receivable turnover is a liquidity measure of accounts receivable in times, which is calculated by dividing the sales by the average amount of net accounts receivables. In other words, average receivable turnover ratio identifies the number of times the average amount of accounts receivables being collected during a particular period. Days’ sales in receivables: Days’ sales in receivables indicate the number of days taken by a business, to collect its outstanding amount of accounts receivable on an average. It is otherwise known as average collection period. To calculate: Company R’s accounts receivable turnover ratio for 2016 and 2015.

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Answer 1

Question

Chapter 8, Problem 8.6BPE

(a)

To determine

Accounts receivable turnover:

Accounts receivable turnover is a liquidity measure of accounts receivable in times, which is calculated by dividing the sales by the average amount of net accounts receivables. In other words, average receivable turnover ratio identifies the number of times the average amount of accounts receivables being collected during a particular period.

Days’ sales in receivables:

Days’ sales in receivables indicate the number of days taken by a business, to collect its outstanding amount of accounts receivable on an average. It is otherwise known as average collection period.

To calculate: Company R’s accounts receivable turnover ratio for 2016 and 2015.

(b)

To determine

To calculate: Company R’s days’ sales in receivables for 2016 and 2015.

(c)

To determine

To identify: Whether the change in accounts receivable turnover and the day’s sales in receivables from 2015 to 2016 are favorable or unfavorable.

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The following data are taken from the financial statements of Colby Company. Accounts receivable (net), end of year Net sales on account Terms for all sales are 1/10, n/45 Accounts Receivable turnover Average collection period (b) 2022 $550,000 2022 2021 4,300,000 4,000,000 7.9 times $540,000 2021 7.5 times 46.2 days 48.7 days What conclusions about the management of accounts receivable can be drawn from the accounts receivable turnover and the average collections period.

Use the following financial statement information from Black Water Industries. BLACK WATER INDUSTRIES Ending Accounts Receivable Year Net Credit Sales 2017 $690,430 $335,250 2018 705,290 364,450 2019 770,500 406,650 A. Compute the accounts receivable turnover ratios for 2018 and 2019. Round your answers to two decimal places. 2018 times 2019 times B. Using the accounts receivable turnover, choose the statement that most closely describes the company's management of its receivables. a. The company's lending policies may be too strict. b. Collection efforts are not aggressive enough. There may be uncollectable receivables affecting the beginning and ending C. balances. d. All of the above statements may be correct. a b d

The following is select financial statement information from Vortex Computing: Year Net Credit Sales Ending Accounts Receivable 2018 $1,557,200 $398,000 2019 $1,755,310 $444,400 2020 $1,865,170 $500,780 Compute the accounts receivable turnover ratios and the number of days’ sales in receivables ratios for 2019 and 2020 (round answers to two decimal places): 2019 Accounts Receivable Turnover = ["", "", "", ""] times. 2019 Days' Sales in Receivables = ["", "", "", ""] days. 2020 Accounts Receivable Turnover = ["", "", "", ""] times. 2020 Days' Sales in Receivables = ["", "", "", ""] days.

Answer 2

Question

Chapter 8, Problem 8.6BPE

(a)

To determine

Accounts receivable turnover:

Accounts receivable turnover is a liquidity measure of accounts receivable in times, which is calculated by dividing the sales by the average amount of net accounts receivables. In other words, average receivable turnover ratio identifies the number of times the average amount of accounts receivables being collected during a particular period.

Days’ sales in receivables:

Days’ sales in receivables indicate the number of days taken by a business, to collect its outstanding amount of accounts receivable on an average. It is otherwise known as average collection period.

To calculate: Company R’s accounts receivable turnover ratio for 2016 and 2015.

(b)

To determine

To calculate: Company R’s days’ sales in receivables for 2016 and 2015.

(c)

To determine

To identify: Whether the change in accounts receivable turnover and the day’s sales in receivables from 2015 to 2016 are favorable or unfavorable.

Expert Solution & Answer

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Answer 3

Question

Chapter 8, Problem 8.6BPE

(a)

To determine

Accounts receivable turnover:

Accounts receivable turnover is a liquidity measure of accounts receivable in times, which is calculated by dividing the sales by the average amount of net accounts receivables. In other words, average receivable turnover ratio identifies the number of times the average amount of accounts receivables being collected during a particular period.

Days’ sales in receivables:

Days’ sales in receivables indicate the number of days taken by a business, to collect its outstanding amount of accounts receivable on an average. It is otherwise known as average collection period.

To calculate: Company R’s accounts receivable turnover ratio for 2016 and 2015.

(b)

To determine

To calculate: Company R’s days’ sales in receivables for 2016 and 2015.

(c)

To determine

To identify: Whether the change in accounts receivable turnover and the day’s sales in receivables from 2015 to 2016 are favorable or unfavorable.

Expert Solution & Answer

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Answer 4

Question

Chapter 8, Problem 8.6BPE

(a)

To determine

Accounts receivable turnover:

Accounts receivable turnover is a liquidity measure of accounts receivable in times, which is calculated by dividing the sales by the average amount of net accounts receivables. In other words, average receivable turnover ratio identifies the number of times the average amount of accounts receivables being collected during a particular period.

Days’ sales in receivables:

Days’ sales in receivables indicate the number of days taken by a business, to collect its outstanding amount of accounts receivable on an average. It is otherwise known as average collection period.

To calculate: Company R’s accounts receivable turnover ratio for 2016 and 2015.

(b)

To determine

To calculate: Company R’s days’ sales in receivables for 2016 and 2015.

(c)

To determine

To identify: Whether the change in accounts receivable turnover and the day’s sales in receivables from 2015 to 2016 are favorable or unfavorable.

Expert Solution & Answer

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Answer 5

Chapter 8, Problem 8.6BPE

(a)

To determine

Accounts receivable turnover:

Accounts receivable turnover is a liquidity measure of accounts receivable in times, which is calculated by dividing the sales by the average amount of net accounts receivables. In other words, average receivable turnover ratio identifies the number of times the average amount of accounts receivables being collected during a particular period.

Days’ sales in receivables:

Days’ sales in receivables indicate the number of days taken by a business, to collect its outstanding amount of accounts receivable on an average. It is otherwise known as average collection period.

To calculate: Company R’s accounts receivable turnover ratio for 2016 and 2015.

(b)

To determine

To calculate: Company R’s days’ sales in receivables for 2016 and 2015.

(c)

To determine

To identify: Whether the change in accounts receivable turnover and the day’s sales in receivables from 2015 to 2016 are favorable or unfavorable.

Answer 6

Chapter 8, Problem 8.6BPE

(a)

To determine

Accounts receivable turnover:

Accounts receivable turnover is a liquidity measure of accounts receivable in times, which is calculated by dividing the sales by the average amount of net accounts receivables. In other words, average receivable turnover ratio identifies the number of times the average amount of accounts receivables being collected during a particular period.

Days’ sales in receivables:

Days’ sales in receivables indicate the number of days taken by a business, to collect its outstanding amount of accounts receivable on an average. It is otherwise known as average collection period.

To calculate: Company R’s accounts receivable turnover ratio for 2016 and 2015.

Answer 7

Chapter 8, Problem 8.6BPE

(a)

To determine

Accounts receivable turnover:

Accounts receivable turnover is a liquidity measure of accounts receivable in times, which is calculated by dividing the sales by the average amount of net accounts receivables. In other words, average receivable turnover ratio identifies the number of times the average amount of accounts receivables being collected during a particular period.

Days’ sales in receivables:

Days’ sales in receivables indicate the number of days taken by a business, to collect its outstanding amount of accounts receivable on an average. It is otherwise known as average collection period.

To calculate: Company R’s accounts receivable turnover ratio for 2016 and 2015.

Answer 8

(b)

To determine

To calculate: Company R’s days’ sales in receivables for 2016 and 2015.

Answer 9

(b)

To determine

To calculate: Company R’s days’ sales in receivables for 2016 and 2015.

Answer 10

(c)

To determine

To identify: Whether the change in accounts receivable turnover and the day’s sales in receivables from 2015 to 2016 are favorable or unfavorable.

Answer 11

(c)

To determine

To identify: Whether the change in accounts receivable turnover and the day’s sales in receivables from 2015 to 2016 are favorable or unfavorable.

Answer 12

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Answer 13

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Answer 14

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Answer 15

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Solution Summary: The author explains Accounts receivable turnover, which is calculated by dividing the sales by the average amount of net accounts.

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To calculate: Company R’s days’ sales in receivables for 2016 and 2015.

To identify: Whether the change in accounts receivable turnover and the day’s sales in receivables from 2015 to 2016 are favorable or unfavorable.

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Chapter 8 Solutions