The Following Information Is from the Financial Statements of Exquisite

question 105

Essay

The following information is from the financial statements of Exquisite Ensembles:
$$\begin{array} { | l | r | r | r | } \hline & \text { YR 3 } & \text { YR 2 } & \text { YR 1 } \\\hline \text { Net sales } & \$ 1,260,000 & \$ 1,020,000 & \$ 850,000 \\\hline \text { Accounts receivable (Dec 31) } & 92,800 & 88,000 & 84,200 \\\hline\end{array}$$ Calculate Exquisite Ensembles' accounts receivable turnover ratio for YR 2 and YR 3. Compare the two results and give a possible explanation for any significant change.

---

Definitions:

Operating Cash Flow

Refers to the amount of cash generated by a company's normal business operations.

Depreciation

The process of allocating the cost of a tangible asset over its useful life, representing the asset's consumption or wear and tear over time.

Interest Paid

The cost incurred for borrowing money, typically expressed as a percentage of the principal, payable to the lender.

Net Working Capital

The gap between an organization's present assets and its current debts, highlighting the business's short-term financial well-being and effectiveness in its operations.