In Year 1 a Company Had Net Sales of $50,000

question 107

Multiple Choice

In Year 1 a company had net sales of $50,000 and ending accounts receivable of $2,000.In Year 2 this company had net sales of $80,000 and ending accounts receivable of $4,000.Use days' sales uncollected to determine which of the following statements is true

• A)Days' sales uncollected in Year 1 is 14.6 days and in Year 2 is 18.25 days.This measure indicates that the company's liquidity is declining
• B)Days' sales uncollected in Year 1 is 14.6 days and in Year 2 is 18.25 days.This measure indicates that the company's liquidity is improving
• C)Days' sales uncollected in Year 1 is 25 days and in Year 2 is 20 days.This measure indicates that the company's liquidity is declining
• D)Days' sales uncollected in Year 1 is 25 days and in Year 2 is 20 days.This measure indicates that the company's liquidity is improving
• E)Days' sales uncollected in Year 1 is .04 days and in Year 2 is .05 days.This measure indicates that the company's liquidity is improving

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Definitions:

Standard Deviation

A statistical measure of the dispersion or variability within a data set, indicating how spread out the numbers are from the mean.

Variability

The extent to which data points in a statistical distribution or dataset differ from each other and from the mean.

Standard Deviation

A statistic that measures the dispersion or variation of a set of values from their mean.

Average

A statistical measure representing the central or typical value in a set of data, calculated by dividing the sum of all values by the number of values.