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Accounts receivable turnover and days’ sales in receivables American Eagle Outfitters, Inc. sells clothing, accessories, and personal care products for men and women through its retail stores. American Eagle reported the following data (in millions) for two recent years: Year 2 Year 1 Sales $3,522 $3,283 Accounts receivable 81 68 Assume that accounts receivable (in millions) were $74 million 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 day’s 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 American Eagle Outfitters’ 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 9.28EX
Textbook Problem

Accounts receivable turnover and days’ sales in receivables

American Eagle Outfitters, Inc. sells clothing, accessories, and personal care products for men and women through its retail stores. American Eagle reported the following data (in millions) for two recent years:

  Year 2 Year 1
Sales $3,522 $3,283
Accounts receivable 81 68

Assume that accounts receivable (in millions) were $74 million 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 day’s 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 American Eagle Outfitters’ efficiency in collecting receivables?

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Chapter 9 Solutions

Accounting
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