Answer:
1, Nike = 18,590 / [(2,614 + 2,746) / 2] = 7 days
Adidas = 9,784.8 / [(1,580+1400)/2] = 6.57 days
2. Nike = 365 / 6.94 days = 52 days
Adidas = 365 / 6.57 days = 55 days
Explanation:
A. Accounts receivable turnover for both companies.
1. To calculate the accounts receivable turnover, start by adding the beginning and ending accounts receivable and divide it by 2
2. to calculate the average accounts receivable for the period. Take the figure in 1 above and divide it into the net credit sales for the year for the average accounts receivable turnover.
Credit sales / [(opening receivables + closing receivables) / 2]
Nike = 18,590 / [(2,614 + 2,746) / 2] = 7 days
Adidas = 9,784.8 / [(1,580+1400)/2] = 6.57 days
2. Average collection Period = 365 / Average receivables Turnover ratio
Nike = 365 / 6.94 days = 52 days
Adidas = 365 / 6.57 days = 55 days
