Use the Information That Follows Taken from Carter Company's FinancialIf the Industry in Which Carter Is a Member Has

The Answer is Accounts receivable turnover ratio = Net credit sales / Average accounts receivable = $900/$40 = 22.5 times Carter's receivable turnover ratio is less than the industry average, indicating a larger than average accounts receivable balance relative to credit sales. This indicates that Carter is less efficient in collecting receivables from customers than the average firm in its industry.

Use the Information That Follows Taken from Carter Company's FinancialIf the Industry in Which Carter Is a Member Has

The Answer is Accounts receivable turnover ratio = Net credit sales / Average accounts receivable = $900/$40 = 22.5 times Carter's receivable turnover ratio is less than the industry average, indicating a larger than average accounts receivable balance relative to credit sales. This indicates that Carter is less efficient in collecting receivables from customers than the average firm in its industry.

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Use the Information That Follows Taken from Carter Company's Financial

question 3

Essay

Use the information that follows taken from Carter Company's financial statements for the years ending December 31, 2017 and 2016.
$\begin{array}{lrr}\text { Balance Sheet Information }&2017&2016\\\hline \text { Assets}\\\text { Cash } & \$ 70 & \$ 80 \\\text { Accounts receivable } & 40 & 40 \\\text { Inventory } & 40 & 60 \\\text { Land, building, and equipment } & \underline{290} & \underline{310} \\\text { Total Assets } & \$ \underline{440} & \$ \underline{490} \\\end{array}$

$\begin{array}{l}\text { Liabilities and Shareholders' Equity }\\\hline \text { Accounts payable } & \$ 95 & \$ 245 \\\text { Common stock } & 210 & 210 \\\text { Retained earnings } & 135& 35\\\text { Total Liabilities \& Shareholders' Equity }& \underline{\$440} &\underline{ \$490} \\\end{array}$

$\begin{array}{lr}\text { Income Statement Information }\\\text { Sales (all sales are on credit) } & \$ 900 \\\text { Cost of goods sold } & \underline{300} \\\text { Gross profit } & {\$600}\\\text { Operating expenses } & \underline{ 500} \\\text { Net income } & \underline{ \$(100)} \end{array}$
If the industry in which Carter is a member has an average accounts receivable turnover of 27 times, determine if in 2017, Carter is more or less efficient at converting sales to cash than the average firm in its industry. Assume all sales were credit sales.

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