(Learning Objectives 1, 7: Show how to speed up cash flow from receivables;evaluate liquidity through ratios) Norfolk Co., Inc., an electronics and appliance chain,reported these figures in millions of dollars:Net sales .........................................Receivables at end of year...............2019$398,5003,8602018$418,5004,110Requirements1. Compute Norfolk’s days’ sales in receivables or days’ sales outstanding (DSO) during 2019.(For this exercise, use “net sales” for “net credit sales” when calculating ratios.)2. Is Norfolk’s DSO long or short? Nico Networks takes 39 days to collect its average levelof receivables. Divencenzo, the overnight shipper, takes 33 days. What causes Norfolk’scollection period to be so different?
(Learning Objectives 1, 7: Show how to speed up cash flow from receivables;
evaluate
reported these figures in millions of dollars:
Net sales .........................................
Receivables at end of year...............
2019
$398,500
3,860
2018
$418,500
4,110
Requirements
1. Compute Norfolk’s days’ sales in receivables or days’ sales outstanding (DSO) during 2019.
(For this exercise, use “net sales” for “net credit sales” when calculating ratios.)
2. Is Norfolk’s DSO long or short? Nico Networks takes 39 days to collect its average level
of receivables. Divencenzo, the overnight shipper, takes 33 days. What causes Norfolk’s
collection period to be so different?
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