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okmarks Window Help ??49% Sun 1:44 AM a? v2.cengagenow.com 8 Spring AC103 ONL I Online teaching and learning resource from Cengage Learning Accounts Receivable Turnover and Days Sales in Receivables Rosco Co. manufactures and markets food products throughout the world. The following sales and receivable data were reported by Rosco for two recent years Year 2 Year 1 Sales Accounts receivable Assume that the accounts receivable were $565,750 at the beginning of Year 1 $6,211,93s $5,948,040 675,250 660,650 a. Compute the accounts receivable turnover for Year 2 and Year 1. Round to one decimal place. Year 2: Year 1: b. Compute the days, sales in receivables at the end or veer 2 and Year 1. Use 365 days per year in your aaeors. Round to one decimal pace. Year 2: Year 1: c. The change in the accounts receivable turnover from year 1 to year 2 indicates an) decrease in the efficiency of collecting accounts recelvable and is a(n) unfavorable change. The change in the days sales in receivables indicates a(n) unfavorable change. The Accounts recevabletmover is a ratio of Sales to Awage acco mcevabl" The number of sate n Recene"·aratoofAver gehanrs ecelvable to Average daily sales Consider the componets of the ratios Consider whether changes nefect efficiency An increasing accounts recaivable 4 de 0Explanation / Answer
a. Accounts receivable turnover ratio = Sales / Average accounts receivables
Year 2:
Accounts receivable turnover ratio = $6,211,935 / [($675,250 + $660,650) / 2] = 9.3
Year 1:
Accounts receivable turnover ratio = $5,948,040 / [($565,750 + $660,650) / 2] = 9.7
b. Days sales in receivables = 365 / Accounts receivable turnover ratio
Year 2:
Days sales in receivables = 365 / 9.3 = 39.2 days
Year 1:
Days sales in receivables = 365 / 9.7 = 37.6 days
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