Question

Problem 8-15B Accounts receivable ratios LO5 Using the Spin Master financial statements in Appendix III, calculate the following ratios for the years ended December 31, 2017 and December 31, 2016. At December 31, 2015, Spin Master had an accounts receivable balance of $134,618,000 and net sales of $879,406,000. Comment on the change. a. Accounts receivable turnover ratio (round to two decimal places) b. Days’ sales in inventory (round to the nearest day)

(On Problem 8-15B assignment, there is a typo error on item 2. The requirement should be for number of days in receivable (not inventory)

Answer 1

Note:	There is no data for calculating the average account receivable so assuming the
	receivable balance of $ 134,618,000 is average account receivable
Solution: 1
	Account Recivable turnover ratio = Net Sales / Average Account Recivable
	Account recivable turnover ratio =
	Net Sales =	$87,94,06,000
	Divide By	"/"By
	Average Account Recivable =	$13,46,18,000
	Account recivable turnover ratio =	6.53
Answer =
	Account recivable turnover ratio =	6.53	Times
Solution: 2
	Day's in Receivables = (Account Receivable / Net Sales ) X No. of Days in year
	Day's in Receivables =
	Account Receivable =	$13,46,18,000
	Divided By	"/" By
	Net Sales	$87,94,06,000
	Equals to	0.153078328
	Multiply By	"X" B y
	No. of Days in year	365
	Day's in Receivables =	56	Days
Answer =
	Day's in Receivables = 56 Days