A Company Reports the Following Results in Its Financial Statements

question 66

Essay

A company reports the following results in its financial statements:
Year 3 Year 2 Year 1
$$\begin{array} { l l l l } \text { Net Sales } & \$ 2,500,000 & \$ 2,100,000 & \$ 1,900,000 \\\text { Accounts receivable, Ending Balance } & 172,000 & 167,000 & 165,000\end{array}$$ Calculate the company accounts receivable turnover for Year 2 and Year 3. Compare these two results and give a possible explanation for any significant change.

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Definitions:

Marginal Benefit

The extra pleasure or benefit gained from consuming an additional unit of a product or service.

Marginal Cost

The added financial burden of producing another unit of a product or service.

Efficient Price

The price at which the supply of a good matches its demand, leading to an optimal distribution of resources in a market.

Consumer Surplus

Consumer surplus represents the discrepancy between what consumers are prepared and capable of spending for a product or service and the actual amount they end up paying.