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 accounts receivable turnover for Year 2 and Year 1.

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Answer 1

Question

Chapter 8, Problem 8.5CP

(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 accounts receivable turnover for Year 2 and Year 1.

(b)

To determine

To calculate: The day’s sales in receivables at the end of Year 2 and Year 1.

(c)

To determine

To conclude: The Efficiency of Corporation C’s management in collecting accounts receivables.

(d)

To determine

To ascertain: Whether Corporation C’s accounts receivable turnover ratio would be higher or lower than a typical manufacturing company.

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Accounts receivable turnover and days' sales in receivablesBest Buy is a specialty retailer of consumer electronics, includingpersonal computers, entertainment software, and appliances. Best Buyoperates retail stores in addition to the Best Buy, Media Play, On Cue, andMagnolia Hi-Fi websites. For two recent years, Best Buy reported thefollowing (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 thebeginning 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 andYear 1. Use 365 days and round to one decimal place. 3. What conclusions can be drawn from (1) and (2) regarding BestBuy's efficiency in collecting receivables?4. What assumption did we make about sales for the Best Buy ratiocomputations that might distort the ratios and therefore cause…

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Question Content Area Accounts Receivable Analysis Xavier Stores Company and Lestrade Stores Inc. are large retail department stores. Both companies offer credit to their customers through their own credit card operations. Information from the financial statements for both companies for two recent years is as follows (in millions): Xavier Lestrade Sales $8,500,000 $4,585,000 Credit card receivables-beginning 820,000 600,000 Credit card receviables-ending 880,000 710,000 a. Determine the (1) accounts receivable turnover and (2) the number of days' sales in receivables for both companies. Round your calculations and answers to one decimal place. Assume 365 days a year. Xavier Lestrade 1. Accounts receivable turnover fill in the blank 1 fill in the blank 2 2. Number of days' sales in receivables fill in the blank 3 days fill in the blank 4 days b. Fill in the blank: Xavier's accounts receivable turnover is much 1)_____ than Lestrade's. The…

Answer 2

Question

Chapter 8, Problem 8.5CP

(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 accounts receivable turnover for Year 2 and Year 1.

(b)

To determine

To calculate: The day’s sales in receivables at the end of Year 2 and Year 1.

(c)

To determine

To conclude: The Efficiency of Corporation C’s management in collecting accounts receivables.

(d)

To determine

To ascertain: Whether Corporation C’s accounts receivable turnover ratio would be higher or lower than a typical manufacturing company.

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Answer 3

Question

Chapter 8, Problem 8.5CP

(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 accounts receivable turnover for Year 2 and Year 1.

(b)

To determine

To calculate: The day’s sales in receivables at the end of Year 2 and Year 1.

(c)

To determine

To conclude: The Efficiency of Corporation C’s management in collecting accounts receivables.

(d)

To determine

To ascertain: Whether Corporation C’s accounts receivable turnover ratio would be higher or lower than a typical manufacturing company.

Expert Solution & Answer

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Answer 4

Question

Chapter 8, Problem 8.5CP

(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 accounts receivable turnover for Year 2 and Year 1.

(b)

To determine

To calculate: The day’s sales in receivables at the end of Year 2 and Year 1.

(c)

To determine

To conclude: The Efficiency of Corporation C’s management in collecting accounts receivables.

(d)

To determine

To ascertain: Whether Corporation C’s accounts receivable turnover ratio would be higher or lower than a typical manufacturing company.

Expert Solution & Answer

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Answer 5

Chapter 8, Problem 8.5CP

(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 accounts receivable turnover for Year 2 and Year 1.

(b)

To determine

To calculate: The day’s sales in receivables at the end of Year 2 and Year 1.

(c)

To determine

To conclude: The Efficiency of Corporation C’s management in collecting accounts receivables.

(d)

To determine

To ascertain: Whether Corporation C’s accounts receivable turnover ratio would be higher or lower than a typical manufacturing company.

Answer 6

Chapter 8, Problem 8.5CP

(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 accounts receivable turnover for Year 2 and Year 1.

Answer 7

Chapter 8, Problem 8.5CP

(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 accounts receivable turnover for Year 2 and Year 1.

Answer 8

(b)

To determine

To calculate: The day’s sales in receivables at the end of Year 2 and Year 1.

Answer 9

(b)

To determine

To calculate: The day’s sales in receivables at the end of Year 2 and Year 1.

Answer 10

(c)

To determine

To conclude: The Efficiency of Corporation C’s management in collecting accounts receivables.

Answer 11

(c)

To determine

To conclude: The Efficiency of Corporation C’s management in collecting accounts receivables.

Answer 12

(d)

To determine

To ascertain: Whether Corporation C’s accounts receivable turnover ratio would be higher or lower than a typical manufacturing company.

Answer 13

(d)

To determine

To ascertain: Whether Corporation C’s accounts receivable turnover ratio would be higher or lower than a typical manufacturing company.

Answer 14

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Answer 17

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Solution Summary: The author explains accounts receivable turnover, which is calculated by dividing the net credit sales by the average amount of net accounts.

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To calculate: The day’s sales in receivables at the end of Year 2 and Year 1.

To conclude: The Efficiency of Corporation C’s management in collecting accounts receivables.

To ascertain: Whether Corporation C’s accounts receivable turnover ratio would be higher or lower than a typical manufacturing company.

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