Chapter 8, Problem 8QS

To determine

Introduction:

Ratio Analysis

• Ratio analysis is a study of several key metrics of a company based on the data presented in its’ financial statements with an objective to evaluate the financial health of a company.

• It is essential for investors, stakeholders, government bodies etc. to evaluate the key metrics of an entity in order to ensure that the company fulfills the going concern principle and displays financial stability.

The key metrics mentioned above include the following:

• Days’ sales uncollected − A measure of the total outstanding collections for credit sales in number of days.

• It is a measure used by companies to calculate their average collection period and understand how well accounts receivables are being managed.

  $\text{Days sale uncollected = Accounts Receivable / Average Sales per Day}$

To Determine:

Days sales uncollected for 2014 and 2015