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Accounts receivable turnover and days’ sales in receivable s Ralph Lauren Corporation designs, markets, and distributes a variety of apparel, home decor, accessory, and fragrance products. The company’s 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: For the Period Ending Year2 Year 1 Sales $7,620,000 $7,450,000 Accounts receivable 8S7,000 800,000 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 Lauren’s efficiency in collecting receivables?

BuyFind

Accounting

27th Edition
WARREN + 5 others
Publisher: Cengage Learning,
ISBN: 9781337272094
BuyFind

Accounting

27th Edition
WARREN + 5 others
Publisher: Cengage Learning,
ISBN: 9781337272094

Solutions

Chapter
Section
Chapter 9, Problem 9.26EX
Textbook Problem

Accounts receivable turnover and days’ sales in receivables

Ralph Lauren Corporation designs, markets, and distributes a variety of apparel, home decor, accessory, and fragrance products. The company’s 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:

  For the Period Ending
Year2 Year 1
Sales $7,620,000 $7,450,000
Accounts receivable 8S7,000 800,000

Assume that accounts receivable (in millions) were $607,000 at the beginning of Year 1.

  1. a. Compute the accounts receivable turnover for Year 2 and Year 1. Round to two decimal places.
  2. b. Compute the days’ sales in receivables for Year 2 and Year 1. Use 365 days and round to one decimal place.
  3. c. What conclusions can be drawn from these analyses regarding Ralph Lauren’s efficiency in collecting receivables?

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Chapter 9 Solutions

Accounting
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