Based on the Following Data and Using a 365-Day Year

question 74

Essay

Based on the following data and using a 365-day year, compute
(a) the accounts receivable turnover and
(b) days' sales in receivables for Year 2. Round to two decimal places. The industry average turnover is 20 times during the year, and the days' sales in receivables averages 25.
(c) Comment on this situation. $\begin{array}{lr}12 / 31 / \text { Year } 1 \text { accounts receivable } & 100,000 \\12 / 31 / \text { Year } 2 \text { accounts receivable } & 70,000 \\\text { For the year ended } 12 / 31 / \text { Year } 1 \text {, sales } & 1,050,000 \\\text { For the year ended } 12 / 31 / \text { Year } 2 \text {, sales } & 1,200,000\end{array}$

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Definitions:

Percentage Of Ownership

Refers to the fraction of a company's shares that an individual or entity owns, typically expressed as a percentage of the total shares.

Financial Statements

Reports that summarize the financial performance, position, and cash flows of a business over a specific period.

Investor

An individual or entity that allocates capital with the expectation of receiving financial returns.

Investee

denotes an entity in which another entity holds an interest, typically through investment.