EX 8-28 Accounts receivable turnover and days’ sales in receivables
The Limited Brands Inc. sells women’s clothing and personal health care products through specialty retail stores including Victoria’s Secret and Bath & Body Works stores. The Limited Brands reported the following (in millions) for two recent years:
|
Year 2 |
Year 1 |
|
|
Net sales |
$9,613 |
$8,632 |
|
Accounts receivable |
267 |
249 |
Assume that accounts receivable (in millions) were $313 at the beginning of Year 1.
a. Compute the accounts receivable turnover for Year 2 and Year 1. Round to one decimal place.
b. Compute the day’s sales in receivables for Year 2 and Year 1. Round to one decimal place.
c. What conclusions can be drawn from these analyses regarding The Limited Brands’ efficiency in collecting receivables?