(1)
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 accounts receivable turnover for Year 2 and Year 1.
(2)
To calculate: The day’s sales in receivables at the end of Year 2 and Year 1.
(3)
To conclude: The Efficiency of Company B’s management in collecting accounts receivables.
(4)
The assumption about sales that might distort the ratios and makes the ratios not to be comparable for Year 2 and Year 1.
Want to see the full answer?
Check out a sample textbook solutionChapter 9 Solutions
Accounting (Text Only)
- Polo Ralph Lauren Corporation designs, markets, and distributes a variety of apparel, home decor, accessory, and fragrance products. The companys products include such brands as Polo by Ralph Lauren, Ralph Lauren Purple Label, Ralph Lauren, Polo Jeans Co., and Chaps. Polo Ralph Lauren reported the following (in thousands) for two recent years: Assume that accounts receivable (in millions) were 486,200 at the beginning of Year 1. a. Compute the accounts receivable turnover for Year 2 and Year 1. Round to one decimal place. b. Compute the days sales in receivables for Year 2 and Year 1. Use 365 days and round to one decimal place. c. What conclusions can be drawn from these analyses regarding Ralph Laurens efficiency in collecting receivables?arrow_forwardRalph Lauren Corporation designs, markets, and distributes a variety of apparel, home decor, accessory, and fragrance products. The companys products include such brands as Polo by Ralph Lauren, Ralph Lauren Purple Label, Ralph Lauren, Polo Jeans Co., and Chaps. Polo Ralph Lauren reported the following (in thousands) for two recent years: Assume that accounts receivable (in millions) were 607,000 at the beginning of Year 1. a. Compute the accounts receivable turnover for Year 2 and Year 1. Round to two decimal places. b. Compute the days sales in receivables for Year 2 and Year 1. Use 365 days and round to one decimal place. c. What conclusions can be drawn from these analyses regarding Ralph Laurens efficiency in collecting receivables?arrow_forwardAccounts Receivable Balance Hart Inc. began the year with $315,700 of accounts receivable. During the year, Hart sold a considerable amount of merchandise on credit and collected $2,427,000 of its credit sales. At the end of the year, the accounts receivable balance is $16,800 lower than the beginning balance. Required: Calculate the amount of credit sales during the period.arrow_forward
- Accounts Receivable Turnover and Days' Sales in Receivables Rosco Co. manufactures and markets food products throughout the world. The following sales and receivable data were reported by Rosco for two recent years: Year 2 Year 1 Sales $7,259,850 $6,860,175 Accounts receivable 719,050 704,450 Assume that the accounts receivable were $602,250 at the beginning of Year 1. a. Compute the accounts receivable turnover for Year 2 and Year 1. Round your answers to one decimal place. Year 2: Year 1: b. Compute the days' sales receivables at the end of Year 2 and Year 1. Use 365 days per year your calculations. Round your answers to one decimal place. Year 2: days Year 1: days C. The change in the accounts receivable turnover from year 1 to year 2 indicates a(n) indicates a(n) - in the efficiency of collecting accounts receivable and is a(n) change. The change in the days' sales in receivables change. Check My Work Previousarrow_forwardQuasar, Inc. sells clothing, accessories, and personal care products for men and women through its retail stores. Quasar reported the following data for two recent years: Year 2 Year 1 Sales $4,446,795 $4,435,480 Accounts receivable 346,750 332,150 Assume that accounts receivable were $383,250 at the beginning of Year 1. a. Compute the accounts receivable turnover for Year 2 and Year 1. Round to one decimal place. Year 2: Year 1: b. Compute the days' sales in receivables for Year 2 and Year 1. Round interim calculations and final answers to one decimal place. Use 365 days per year in your calculations. Year 2: days Year 1: days c. The change in accounts receivable turnover from year 1 to year 2 indicates a(n) in the efficiency of collecting accounts receivable and is a(n) change. The change in the days' sales in receivables indicates a(n) change.arrow_forwardQuasar, Inc. sells clothing, accessories, and personal care products for men and women through its retail stores. Quasar reported the following data for two recent years: Year 2 Year 1 Sales $1,904,205 $1,877,925 Accounts receivable 175,200 $167,900 Assume that accounts receivable were $189,800 at the beginning of Year 1. a. Compute the accounts receivable turnover for Year 2 and Year 1. Round to one decimal place. Year 2: fill in the blank 1 Year 1: fill in the blank 2 b. Compute the days' sales in receivables for Year 2 and Year 1. Round interim calculations and final answers to one decimal place. Use 365 days per year in your calculations. Year 2: fill in the blank 3 days Year 1: fill in the blank 4 days c. The change in accounts receivable turnover from year 1 to year 2 indicates a(n) ______ in the efficiency of collecting accounts receivable and is a(n) ______ change. The change in the days' sales in receivables indicates a(n) ______…arrow_forward
- Best Buy is a specialty retailer of consumer electronics, including personal computers, entertainment software, and appliances. Best Buy operates retail stores in addition to the Best Buy, Media Play, On Cue, and Magnolia Hi-Fi websites. For two recent years, Best Buy reported the following (in millions): Year 2 Year 1 Sales $39,528 $40,339 Accounts receivable at end of year 1,162 1,280 Assume that the accounts receivable (in millions) were $1,308 at the beginning of fiscal Year 1. 1. Compute the accounts receivable turnover for Year 2 and Year 1. Round to two decimal places. 2. Compute the days' sales in receivables at the end of Year 2 and Year 1. Use 365 days and round to one decimal place. What conclusions can be drawn from (1) and (2) regarding Best Buy's 3. efficiency in collecting receivables? 4. What assumption did we make about sales for the Best Buy ratio computa- tions that might distort the ratios and therefore cause the ratios not to be comparable for Year 2 and Year 1?arrow_forwardAnalyze DISH Network DISH Network Corporation (DISH) provides satellite-based entertainment services to residential and business customers. Services are billed and collected on a monthly basis. DISH Network reported the following (in millions) for two recent years: 20Y4 20Y3 Sales $15,034 $15,069 Accounts receivable: Beginning of year 864 951 End of year 753 864 a. Determine the accounts receivable turnover for 20Y3 and 20Y4. Round to one decimal place. 20Y3 20Y4 Accounts Receivable Turnover fill in the blank 1 fill in the blank 2 b. Compute the number of days’ sales in receivables for 20Y3 and 20Y4. Use 365 days and round all calculations to one decimal place. 20Y3 20Y4 Number of Days’ Sales in Receivables fill in the blank 3 days fill in the blank 4 days c. The change in the accounts receivable turnover from 20Y3 to 20Y4 indicates a(n) in the efficiency of collecting accounts receivable and is a(n) trend. The change…arrow_forwardThe Campbell Soup Company manufactures and markets food products throughout the world. The following sales and receivable data (in millions) were reported by Campbell Soup for two recent years: Year 2 Year 1 $8,082 $8,268 Sales 670 Accounts receivable 647 Assume that the accounts receivable (in thousands) were $635 million at the beginning of Year 1. a. Compute the accounts receivable turnover for Year 2 and Year 1. Round average ac- counts receivable to one decimal place and accounts receivable turnover to two decimal places. b. Compute the days' sales in receivables at the end of Year 2 and Year 1. Use 365 days and round to one decimal place. What conclusions can be drawn from these analyses regarding Campbell's C. efficiency in collecting receivables?arrow_forward
- Rosco Co. manufactures and markets food products throughout the world. The following sales and receivable data were reported by Rosco for two recent years: Year 2 Year 1 Sales $4,126,325 $3,918,640 Accounts receivable 489,100 481,800 Assume that the accounts receivable were $408,800 at the beginning of Year 1. a. Compute the accounts receivable turnover for Year 2 and Year 1. Round to one decimal place. Year 2: fill in the blank 1 Year 1: fill in the blank 2 b. Compute the days' sales in receivables at the end of Year 2 and Year 1. Use 365 days per year in your calculations. Round to one decimal place. Year 2: fill in the blank 3 days Year 1: fill in the blank 4 daysarrow_forwardGeneral Accounting question give correct answerarrow_forwardThe following information is taken from the annual report of Coca-Cola Enterprises, Inc.: (amounts in millions) Year 1 Year 2 Net sales $19,658 $20,206 Accounts receivable (net) 1,884 1,802 Calculate the receivable turnover ratio and the receivable collection period for Year 1 and Year 2. Round your answer to two decimal places. Year 1 Year 2 Receivable turnover ratio Receivable collection period days days How much additional cash flow from operations could Coca-Cola Enterprises generate in Year 2 if it could reduce its receivable collection period to just 30 days?Round your final answer to the nearest million dollar. Year 2 Additional cash flow millionarrow_forward
- Financial AccountingAccountingISBN:9781305088436Author:Carl Warren, Jim Reeve, Jonathan DuchacPublisher:Cengage LearningFinancial AccountingAccountingISBN:9781337272124Author:Carl Warren, James M. Reeve, Jonathan DuchacPublisher:Cengage LearningManagerial AccountingAccountingISBN:9781337912020Author:Carl Warren, Ph.d. Cma William B. TaylerPublisher:South-Western College Pub
- Financial Accounting: The Impact on Decision Make...AccountingISBN:9781305654174Author:Gary A. Porter, Curtis L. NortonPublisher:Cengage LearningCollege Accounting, Chapters 1-27AccountingISBN:9781337794756Author:HEINTZ, James A.Publisher:Cengage Learning,