(1)
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.
To calculate: The accounts receivable turnover for Year 2 and Year 1.
(2)
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 day’s sales in receivables at the end of Year 2 and Year 1.
(3)
To conclude: The Efficiency of Incorporation A’s management in collecting accounts receivables.
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Chapter 9 Solutions
Accounting
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- Emerson Electric Emerson Electric is engaged in design, manufacture, and sale of a broad range of electrical, electromechanical, and electronic products and systems. The following shows Emerson's net income and net income before extraordinary items for the past 20 years (in millions): PROBLEM 2–14 Earnings Management Strategies Net Income Net Income Net Income before before before Net Extraordinary Net Extraordinary Items Net Extraordinary Year Income Items Year Income Year Income Items Y1 $201.0 $201.0 Y8 $408.9 $408.9 Y15 $ 708.1 $ 708.1 Y2 237.7 237.7 Y9 467.2 467.2 Y16 788.5 904.4 Y3 273.3 273.3 Y10 528.8 528.8 Y17 907.7 929.0 300.1 300.1 Y11 588.0 588.0 1,018.5 1,121.9 1,228.6 Y4 Y18 1,018.5 613.2 613.2 1,121.9 1,228.6 Y5 302.9 302.9 Y12 Y19 Y6 349.2 349.2 Y13 631.9 631.9 Y20 Y7 401.1 401.1 Y14 662.9 662.9 Emerson has achieved consistent earnings growth for more than 160 straight quarters (more than 40 years). CHECK Required: Income smoothing strategy a. What earnings strategy do…arrow_forwardAnalyze Apple Inc. by segment Segment disclosure by Apple Inc. (AAPL) provides sales information for its major product lines for three recent years as follows (in millions): Segment Year 3 Year 2 Year 1 iPhone $136,700 $155,041 $101,991 iPad 20,628 23,227 30,283 Mac 22,831 25,471 24,079 Services 24,348 19,909 18,063 Other Products 11,132 10,067 8,379 Total sales $215,639 $233,715 $182,795 The Services segment includes sales from iTunes Store, App Store, Mac App Store, TV App Store, iBooks Store, Apple Music, AppleCare, and Apple Pay. The Other Products segment includes sales from Apple TV, Apple Watch, Beats products, iPod, and Apple-branded accessories. a. Prepare a vertical analysis of Year 3 sales. (Round percentages to nearest whole percent.)arrow_forwardDell Incorporated is the leading manufacturer of personal computers. In a recent year, it reported the following in millions of dollars: Net sales revenue Cost of sales Beginning inventory Ending inventory $ 76,141 58,344 1,700 1,880 Required: Determine the inventory turnover ratio and average days to sell inventory for the current year. Note: Use 365 days a year. Round "Inventory turnover" to 2 decimal places and "Average days to sell inventory" to 1 decimal place. Inventory turnover Average days to sell inventory daysarrow_forward
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