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Accounts receivable turnover and days’ sales in receivables The Campbell Soup Company manufactures and markets food products throughout the world. The following sales and receivable data (in millions) were reported by Campbell Soup for two recent years: Year 2 Year 1 Sales $8,082 $8,268 Accounts receivable 647 670 Assume that the accounts receivable (in thousands) were $635 million at the beginning of Year 1. a. Compute the accounts receivable turnover for Year 2 and Year 1. Round average accounts receivable to one decimal place and accounts receivable turnover to two decimal places. b. Compute the days’ sales in receivables at the end of Year 2 and Year 1. Use 365 days and round to one decimal place. c. What conclusions can be drawn from these analyses regarding Campbell’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 9.27EX
Textbook Problem

Accounts receivable turnover and days’ sales in receivables

The Campbell Soup Company manufactures and markets food products throughout the world. The following sales and receivable data (in millions) were reported by Campbell Soup for two recent years:

  Year 2 Year 1
Sales $8,082 $8,268
Accounts receivable 647 670

Assume that the accounts receivable (in thousands) were $635 million at the beginning of Year 1.

  1. a. Compute the accounts receivable turnover for Year 2 and Year 1. Round average accounts receivable to one decimal place and accounts receivable turnover to two decimal places.
  2. b. Compute the days’ sales in receivables at the end of 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 Campbell’s efficiency in collecting receivables?

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Chapter 9 Solutions

Accounting
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