Accounts receivable turnover Accounts receivable turnover is a liquidity measure of accounts receivable in times, which is calculated by dividing the net credit sales by the average amount of net accounts receivables. In simple, it indicates the number of times the average amount of net accounts receivables has been collected during a particular period. Average collection period: Average collection period indicates the number of days taken by a business to collect its outstanding amount of accounts receivable on an average. To calculate: The average accounts receivable turnover of Company H and Incorporation L.

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Answer 1

Question

Chapter 9, Problem 9.29EX

(a)

To determine

Accounts receivable turnover

Accounts receivable turnover is a liquidity measure of accounts receivable in times, which is calculated by dividing the net credit sales by the average amount of net accounts receivables. In simple, it indicates the number of times the average amount of net accounts receivables has been collected during a particular period.

Average collection period:

Average collection period indicates the number of days taken by a business to collect its outstanding amount of accounts receivable on an average.

To calculate: The average accounts receivable turnover of Company H and Incorporation L.

(b)

To determine

To identify: Whether Company H or Incorporation L has the higher average accounts receivable turnover ratio.

(c)

To determine

To explain: The reason for the difference in average accounts receivable turnover ratio between Company H and Incorporation L.

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Activity measures: m. Calculate the accounts receivable turnover and number of days' sales in accounts receivable (based on a 365-day year) for the most recent year. n. Based on your analysis in m, do you believe that the company is doing an effective job at managing accounts receivable? What would you estimate the industry averages to be for the accounts receivable turnover and number of days' sales in accounts receivable? Explain. o. Calculate the inventory turnover and number of days' sales in inventory (based on a 365-day year) for the most recent year. p. Based on your analysis in o, to what extent does the company need to be concerned about its inventory management policies? In assessing the inventory management policies, would you be more interested in knowing current ratio or acid-test ratio information? Explain.

Based on the following data, what is the accounts receivable turnover? Sales on account during year $545,555 Cost of goods sold during year 200,188 Accounts receivable, beginning of year 48,147 Accounts receivable, end of year 54,388 Inventory, beginning of year 90,742 Inventory, end of year 119,266

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Answer 2

Question

Chapter 9, Problem 9.29EX

(a)

To determine

Accounts receivable turnover

Accounts receivable turnover is a liquidity measure of accounts receivable in times, which is calculated by dividing the net credit sales by the average amount of net accounts receivables. In simple, it indicates the number of times the average amount of net accounts receivables has been collected during a particular period.

Average collection period:

Average collection period indicates the number of days taken by a business to collect its outstanding amount of accounts receivable on an average.

To calculate: The average accounts receivable turnover of Company H and Incorporation L.

(b)

To determine

To identify: Whether Company H or Incorporation L has the higher average accounts receivable turnover ratio.

(c)

To determine

To explain: The reason for the difference in average accounts receivable turnover ratio between Company H and Incorporation L.

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Answer 3

Question

Chapter 9, Problem 9.29EX

(a)

To determine

Accounts receivable turnover

Accounts receivable turnover is a liquidity measure of accounts receivable in times, which is calculated by dividing the net credit sales by the average amount of net accounts receivables. In simple, it indicates the number of times the average amount of net accounts receivables has been collected during a particular period.

Average collection period:

Average collection period indicates the number of days taken by a business to collect its outstanding amount of accounts receivable on an average.

To calculate: The average accounts receivable turnover of Company H and Incorporation L.

(b)

To determine

To identify: Whether Company H or Incorporation L has the higher average accounts receivable turnover ratio.

(c)

To determine

To explain: The reason for the difference in average accounts receivable turnover ratio between Company H and Incorporation L.

Expert Solution & Answer

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Answer 4

Question

Chapter 9, Problem 9.29EX

(a)

To determine

Accounts receivable turnover

Accounts receivable turnover is a liquidity measure of accounts receivable in times, which is calculated by dividing the net credit sales by the average amount of net accounts receivables. In simple, it indicates the number of times the average amount of net accounts receivables has been collected during a particular period.

Average collection period:

Average collection period indicates the number of days taken by a business to collect its outstanding amount of accounts receivable on an average.

To calculate: The average accounts receivable turnover of Company H and Incorporation L.

(b)

To determine

To identify: Whether Company H or Incorporation L has the higher average accounts receivable turnover ratio.

(c)

To determine

To explain: The reason for the difference in average accounts receivable turnover ratio between Company H and Incorporation L.

Expert Solution & Answer

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Answer 5

Chapter 9, Problem 9.29EX

(a)

To determine

Accounts receivable turnover

Accounts receivable turnover is a liquidity measure of accounts receivable in times, which is calculated by dividing the net credit sales by the average amount of net accounts receivables. In simple, it indicates the number of times the average amount of net accounts receivables has been collected during a particular period.

Average collection period:

Average collection period indicates the number of days taken by a business to collect its outstanding amount of accounts receivable on an average.

To calculate: The average accounts receivable turnover of Company H and Incorporation L.

(b)

To determine

To identify: Whether Company H or Incorporation L has the higher average accounts receivable turnover ratio.

(c)

To determine

To explain: The reason for the difference in average accounts receivable turnover ratio between Company H and Incorporation L.

Answer 6

Chapter 9, Problem 9.29EX

(a)

To determine

Accounts receivable turnover

Accounts receivable turnover is a liquidity measure of accounts receivable in times, which is calculated by dividing the net credit sales by the average amount of net accounts receivables. In simple, it indicates the number of times the average amount of net accounts receivables has been collected during a particular period.

Average collection period:

Average collection period indicates the number of days taken by a business to collect its outstanding amount of accounts receivable on an average.

To calculate: The average accounts receivable turnover of Company H and Incorporation L.

Answer 7

Chapter 9, Problem 9.29EX

(a)

To determine

Accounts receivable turnover

Accounts receivable turnover is a liquidity measure of accounts receivable in times, which is calculated by dividing the net credit sales by the average amount of net accounts receivables. In simple, it indicates the number of times the average amount of net accounts receivables has been collected during a particular period.

Average collection period:

Average collection period indicates the number of days taken by a business to collect its outstanding amount of accounts receivable on an average.

To calculate: The average accounts receivable turnover of Company H and Incorporation L.

Answer 8

(b)

To determine

To identify: Whether Company H or Incorporation L has the higher average accounts receivable turnover ratio.

Answer 9

(b)

To determine

To identify: Whether Company H or Incorporation L has the higher average accounts receivable turnover ratio.

Answer 10

(c)

To determine

To explain: The reason for the difference in average accounts receivable turnover ratio between Company H and Incorporation L.

Answer 11

(c)

To determine

To explain: The reason for the difference in average accounts receivable turnover ratio between Company H and Incorporation L.

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 calculates the average accounts receivable turnover of Company H and Incorporation L.

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To identify: Whether Company H or Incorporation L has the higher average accounts receivable turnover ratio.

To explain: The reason for the difference in average accounts receivable turnover ratio between Company H and Incorporation L.

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Chapter 9 Solutions