Answer:
a. Accounts Receivables Turnover
Year 1 = 10.5
Year 2 = 10.7
b. Day's Sales in Receivables
Year 1 = 34.8 days
Year 2 = 34.1 days
c. From the above it can be concluded that the company has increased efficiency to collect debtors from year 1 where it was approximately 35 days and in year 2 it is 34 days.
Therefore the efficiency has increased.
Explanation:
Accounts Receivables Turnover = Net Credit Sales/Average Receivables
Since not provided which portion is credit sales let total sales be credit sales.
For Year 1
We have Credit Sales = $5,660,300
Average Receivables = (Opening + Closing)/2
Opening = $486,200
Closing = $592,700
Total = $1,078,900
Average = $1,078,900/2 = $539,450
Accounts Receivables Turnover = $5,660,300/$539,450 = 10.5
Similarly for Year 2
Credit Sales = $6,859,500
Opening Receivables = $592,700
Closing Receivables = $690,000
Total = 1,282,700
Average = $1,282,700/2 = $641,350
Accounts Receivables Turnover = $6,859,500/$641,350 = 10.7
Days Sales in receivables = Average Receivables / Sales per day
Year 1 Sales Per Day = $5,660,300/365 = $15,507.67
Days Sales in receivables Year 1 = $539,450/$15,507.67 = 34.8 days
Year 2 Sales Per Day = $6,859,500/365 = $18,793.15
Days Sales in receivables Year 1 = $641,350/$18,793.15 = 34.1 days
a. Accounts Receivables Turnover
Year 1 = 10.5
Year 2 = 10.7
b. Day's Sales in Receivables
Year 1 = 34.8 days
Year 2 = 34.1 days
c. From the above it can be concluded that the company has increased efficiency to collect debtors from year 1 where it was approximately 35 days and in year 2 it is 34 days.
Therefore the efficiency has increased.
