(Learning Objectives 1, 7: Show how to speed up cash flow from receivables;evaluate liquidity through ratios) Geneva Co., Inc., an electronics and appliance chain,reported these figures in millions of dollars:Net sales .........................................Receivables at end of year...............2019$523,1253,8602018$543,1254,510Requirements1. Compute Geneva’s days’ sales in receivables or days’ sales outstanding (DSO) during2019. (For this exercise, use “net sales” for “net credit sales” when calculating ratios.)2. Is Geneva’s DSO long or short? Kurzwel Networks takes 39 days to collect its averagelevel of receivables. Domarko Freight, the overnight shipper, takes 33 days. What causesGeneva’s collection 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
$523,125
3,860
2018
$543,125
4,510
Requirements
1. Compute Geneva’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 Geneva’s DSO long or short? Kurzwel Networks takes 39 days to collect its average
level of receivables. Domarko Freight, the overnight shipper, takes 33 days. What causes
Geneva’s collection period to be so different?
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