Survey of Accounting (Accounting I)
8th Edition
ISBN: 9781305961883
Author: Carl Warren
Publisher: Cengage Learning
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Question
Chapter 9, Problem 7CDQ
To determine
Concept Introduction:
Accounts receivable turnover ratio:
This is an efficiency ratio that indicates the conversion of the accounts receivable into cash. This ratio is calculated by dividing the Net credit Sales by the Average accounts receivable. The formula to calculate this ratio is as follows:
To Indicate:
The reason of difference in Accounts receivable turnover ratio of both the companies.
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Which of the following statements is true?a. Credit sales increase receivables.b. Collections on account decreasereceivables.c. Write-offs of accounts decreasereceivables.d. All of these statements are true.
Which of the following statements about receivables turnover is false?
Receivables turnover measures the efficiency of the firm in managing and selling inventory
Receivables turnover measures the liquidity of the firm's receivables
Receivables turnover is calculated with revenue in the numerator
A low receivables turnover indicates efficient receivables management
What does the accounts receivable turnover ratio measure, and how is it calculated?
Chapter 9 Solutions
Survey of Accounting (Accounting I)
Ch. 9 - What type of analysis is indicated by the...Ch. 9 - Which of the following measures indicates the...Ch. 9 - Prob. 3SEQCh. 9 - Prob. 4SEQCh. 9 - Prob. 5SEQCh. 9 - That is the difference between horizontal and...Ch. 9 - Prob. 2CDQCh. 9 - Prob. 3CDQCh. 9 - Prob. 4CDQCh. 9 - How would the current and quick ratios of a...
Ch. 9 - For Belzcr Corporation, the working capital at the...Ch. 9 - Prob. 7CDQCh. 9 - Prob. 8CDQCh. 9 - a. Why is it advantageous to have a high inventory...Ch. 9 - Prob. 10CDQCh. 9 - Prob. 11CDQCh. 9 - Prob. 12CDQCh. 9 - Prob. 13CDQCh. 9 - Prob. 14CDQCh. 9 - Prob. 15CDQCh. 9 - Favorable business conditions may bring about...Ch. 9 - Prob. 17CDQCh. 9 - Prob. 9.1ECh. 9 - Vertical analysis of income statement The...Ch. 9 - Common-sized income statement Revenue and expense...Ch. 9 - Prob. 9.4ECh. 9 - Prob. 9.5ECh. 9 - Prob. 9.6ECh. 9 - Prob. 9.7ECh. 9 - Current position analysis The bond indenture for...Ch. 9 - Accounts receivable analysis The following data...Ch. 9 - Prob. 9.10ECh. 9 - Inventory analysis The following data were...Ch. 9 - Inventory analysis Costco Wholesale Corporation...Ch. 9 - Ratio of liabilities to stockholders' equity and...Ch. 9 - Prob. 9.14ECh. 9 - Debt ratio, ratio of liabilities to stockholders'...Ch. 9 - Prob. 9.16ECh. 9 - Profitability metrics The following selected data...Ch. 9 - Profitability metrics Macy's, Inc. (M). sells...Ch. 9 - Seven metrics The following data were taken from...Ch. 9 - Prob. 9.20ECh. 9 - Prob. 9.21ECh. 9 - Prob. 9.22ECh. 9 - Unusual income statement items Assume that the...Ch. 9 - Horizontal analysis for income statement For 20Y3....Ch. 9 - Horizontal analysis for income statement For 20Y3....Ch. 9 - Prob. 9.2.1PCh. 9 - Prob. 9.2.2PCh. 9 - Effect of transactions on current position...Ch. 9 - Effect of transactions on current position...Ch. 9 - Twenty metrics of liquidity, solvency, and...Ch. 9 - Twenty metrics of liquidity, solvency, and...Ch. 9 - Twenty metrics of liquidity, solvency, and...Ch. 9 - Twenty metrics of liquidity, solvency, and...Ch. 9 - Twenty metrics of liquidity, solvency, and...Ch. 9 - Twenty metrics of liquidity, solvency, and...Ch. 9 - Prob. 9.4.7PCh. 9 - Twenty metrics of liquidity, solvency, and...Ch. 9 - Twenty metrics of liquidity, solvency, and...Ch. 9 - Twenty metrics of liquidity, solvency, and...Ch. 9 - Twenty metrics of liquidity, solvency, and...Ch. 9 - Twenty metrics of liquidity, solvency, and...Ch. 9 - Twenty metrics of liquidity, solvency, and...Ch. 9 - Twenty metrics of liquidity, solvency, and...Ch. 9 - Twenty metrics of liquidity, solvency, and...Ch. 9 - Twenty metrics of liquidity, solvency, and...Ch. 9 - Twenty metrics of liquidity, solvency, and...Ch. 9 - Twenty metrics of liquidity, solvency, and...Ch. 9 - Twenty metrics of liquidity, solvency, and...Ch. 9 - Prob. 9.4.20PCh. 9 - Trend analysis Critelli Company has provided the...Ch. 9 - Trend analysis Critelli Company has provided the...Ch. 9 - Prob. 9.1CCh. 9 - Prob. 9.2CCh. 9 - Prob. 9.3CCh. 9 - Prob. 9.4.1CCh. 9 - Prob. 9.4.2CCh. 9 - Prob. 9.4.3CCh. 9 - Comprehensive profitability and solvency analysis...Ch. 9 - Comprehensive profitability and solvency analysis...
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- Use the data in Exercises 9-27 and 9-28 to analyze the accounts receivable turnover ratios of the Campbell Soup Company and American Eagle Outfitters, Inc.a. Compute the average accounts receivable turnover ratio for Campbell Soup and American Eagle for the years shown in Exercises 9-27 (See attachment) and 9-28 (See attachment).b. Does Campbelll Soup or American Eagle have the higher average accounts receivable turnover ratio?c. Explain why the average turnover ratios are different in (b).arrow_forwardWhat information can best be elicited from a receivable ratio? A. company performance with current debt collection B. credit extension effect on cash sales C. likelihood of future customer bankruptcy filings D. an increase in future credit sales to current customersarrow_forwardWhat are some possible negative signals when the product of the accounts receivable turnover ratio is lower (i.e., fewer times)?arrow_forward
- Which of the following best represents a positive product of a lower number of days sales in receivables ratio? A. collection of receivables is quick, and cash can be used for other business expenditures B. collection of receivables is slow, keeping cash secured to receivables C. credit extension is lenient D. the lender only lends to the top 10% of potential creditorsarrow_forwardIs it true that, when one firm sells to another on credit, the seller records the transaction as an account receivable while the buyer records it as an account payable and that, disregarding discounts, the receivable typically exceeds the payable by the amount of profit on the sale?arrow_forwardThe net realizable value of Accounts Receivable represents the company's best estimate of what it expects to collect on it's accounts receivable. It equals the total Accounts Receivable less an allowance for doubtful accounts. True Falsearrow_forward
- What does a low ratio in Creditors Turnover Ratio indicate? a. Company collects the money fast from Debtors b. It shows the speed at which the inventory will be converted into sales c. Company is delaying the payment to the creditors d. Company is making the payment to the creditors very promptlyarrow_forwardWhich of the following is a positive sign that a company can quickly turn its receivables into cash? a. A low receivables turnover ratio.b. A high receivables turnover ratio.c. A low average collection period.d. Both a high receivables turnover ratio and a low average collection period.arrow_forwardCurrent Ratio: Would the following events increase or decrease a firms ratio? a. Inventory sold? b. A firm takes out a bank loan to pay its suuppliers? c. The firm arranges a line of credit that allows it to borrow at any time to pay its suppliers?arrow_forward
- Indicate using a (1), (−), or (0) whether each of the following events would probably cause accounts receivable (A/R), sales, and profits to increase, decrease, or be affected in an indeterminate manner: A/R Sales ProfitsThe firm restricts its credit standards. ______________ ______________ ______________The terms of trade are changed from 2/10, net 30, to 3/10, net 30. ______________ ______________ ______________The terms are changed from 2/10, net 30, to 3/10, net 40. ______________ ______________ ______________The credit manager gets tough with past-due accounts. ______________ ______________ ______________arrow_forwardWhat does a high ratio in Creditors Turnover Ratio indicate? a. Company is delaying the payment to the creditors b. Company is making the payment to the creditors very promptly c. It shows the speed at which the inventory will be converted into sales d. Company collects the money fast from Debtorsarrow_forward1. Which of the following is correct when a company uses the net price method of recording receivables? a. The company records the total invoice price in both the "Accounts Receivable" and "Sales" accounts at the time of sale as if no cash discount is involved b. Sales discount taken is deducted from sales on the income statement to determine net sales c. Cash discount is reflected in the accounting records only when the discount is taken d. Cash discount is reflected in the accounting records only when the discount is not taken e. none of the abovearrow_forward
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