Tecom Had Net Sales of $315,000 and Average Accounts Receivable

question 34

Essay

Tecom had net sales of $315,000 and average accounts receivable of $75,600. Its competitor, ZCom, had net sales of $299,000 and average accounts receivables of $81,350. Calculate the accounts receivable turnover for both companies. Which company is doing a better job of managing its accounts receivables?

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Definitions:

Partnership Assets

Assets owned by a partnership that are used for carrying out its business activities.

Capital Balances

The amount of money that partners or owners have invested in a business, which may change over time with the addition of profits or the deduction of losses and withdrawals.

Income-Sharing

A strategy where income is distributed between stakeholders, partners, or employees based on an agreed-upon formula, often used to motivate and reward.

Net Income

The amount of profit remaining after all operating expenses, taxes, and interest are deducted from total revenue.