The following data are taken from the financial statements of Caprice Company.
|
2012 |
2011 |
|
|
Accounts receivable (net), end of year |
$ 550,000 |
$ 540,000 |
|
Net sales on account |
4,300,000 |
4,000,000 |
|
Terms for all sales are 1/10, n/45. |
Compute for each year (a) the receivables turnover ratio and (b) the average collection period. What conclusions about the management of accounts receivable can be drawn from these data? At the end of 2010, accounts receivable was $520,000.