Question

Simon Company's year-end balance sheets follow. Current Yr 1 Yr Ago 2 Yrs Ago At December 31 Assets Cash Accounts receivable, net Merchandise inventory Prepaid expenses Plant assets, net Total assets Liabilities and Equity Accounts payable Long-term notes payable secured by mortgages on plant assets Common stock, $10 par value Retained earnings Total liabilities and equity $ 27,437 90,000 115,000 8,836 214,637 $ 455, 910 $ 32,071 $ 32,425 62,300 50,400 84,000 60,000 8,419 3,603 206,236 174,672 $ 393, 026 $ 321, 100 $ 115,792 $ 67,750 $ 43,233 87,425 162,500 90,193 $ 455, 910 92,204 72,382 162,500 162,500 70,572 42,985 $ 393,026 $ 321,100 The company's income statements for the Current Year and 1 Year Ago, follow. Assume that all sales are on credit: For Year Ended December 31 Sales Cost of goods sold Other operating expenses Interest expense Income tax expense Total costs and expenses Net income Earnings per share Current Yr $ 592,683 $ 361,537 183,732 10,076 7,705 563,050 $ 29,633 1 Yr Ago $ 467,701 $ 304,006 118,328 10,757 7,016 440, 107 $ 27,594 $ 1.82 $ 1.70

Answer 1

Choose Numerator Net Credit Sales Current Year $ 5,92,683 1 Yr Ago $ 4,67,701 / / Accounts Receivable Turnover Ratio Choose Denominator Average Accounts Receivables $ 76,150 $ 56,350 Accounts Receivable Turnover Accounts Receivable Turnover 7.78 8.30 Times Times Accounts Receivable Turnover Worsen Working: Average Receivables Current Year $ Total 62,300 $ Average 1,52,300 $ 76,150 90,000 $ 1 Yr Ago $ 62,300 $ 50,400 $ 1,12,700 $ 56,350 * Kindly Comment down for any further clarifications/ queries and please upvote.