Question

The days sales in recievable for baker sales is 35 the days sales in receivables for xanadu company is 25 this suggest xanadu is having greater difficulty than barker is in collecting its accounts receivable
A. True
B. False

Answer 1

Answer:

B. False

Explanation:

The days sales in receivable indicates the number of days in which a company receives the payments of its credit sales. A lower number indicates that the business collects the money faster and more efficiently. According to this, the statement is false because the days sales in receivable for baker sales is 35 and for xanadu company is 25 which means that xanadu company is having less difficulty in collecting the money.

Answer 2

Answer:

False

Explanation:

The days sales receivables given shows that it took Xanadu 25 days on the average to receive cash from accounts receivable while it took Baker an average of 35 days to convert accounts receivable to cash.

From the foregoing, it is clear that it is more easier for Xanadu to receive cash from accounts receivable and thus the statement that Xanadu is having grater difficulty in collecting its accounts receivable is far from being true,as a result the correct option is false.