Questions

Accounts Receivable Turnover and Days' Sales in Receivables

Quasar, Inc. sells clothing, accessories, and personal care products for men and women through its retail stores. Quasar reported the following data for two recent years:

	Year 2	Year 1
Sales	$2,824,735		$2,792,250
Accounts receivable	262,800		255,500

Assume that accounts receivable were $292,000 at the beginning of Year 1.

a.  Compute the accounts receivable turnover for Year 2 and Year 1. Round your answer to one decimal place.

Year 2:	fill in the blank 1
Year 1:	fill in the blank 2

b.  Compute the days' sales in receivables for Year 2 and Year 1. Round interim calculations and final answers to one decimal place. Use 365 days per year in your calculations.

Year 2:	fill in the blank 3 days
Year 1:	fill in the blank 4 days

c.  The change in accounts receivable turnover from year 1 to year 2 indicates a(n) increase  in the efficiency of collecting accounts receivable and is a(n) favorable  change. The change in the days' sales in receivables indicates a(n)   change.