20Y3
Average accounts receivable = (Opening accounts receivable+ ending accounts receivable)/2
= (157,000+149,600)/2
= $153,300
Net sales = 919,800
Accounts receivable turnover = Net credit sales/Average accounts receivables
= 919,800/153,300
= 5.9
Number of days Sales in receivables = 365/Accounts receivable turnover
= 365/5.9
= 62 days
20Y2
Average accounts receivable = (Opening accounts receivable+ ending accounts receivable)/2
= (164,200+157,000)/2
= $160,600
Net sales = 867,240
Accounts receivable turnover = Net credit sales/Average accounts receivables
= 867,240/160,600
= 5.4
Number of days Sales in receivables = 365/Accounts receivable turnover
= 365/5.4
= 67 days
20Y3 | 20Y2 | |
1. Accounts receivable turnover | 5.9 | 5.4 |
2. Number of Days sales in receivable. | 62 days | 67 days |
b. The collection of accounts receivable has improved. This can be seen in both the increase in accounts receivable turnover and the decrease in the collection period.
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