The Hawk Company wants to determine the liquidity of its receivables. It has supplied you with the following data regarding selected accounts for December 31, 2000, and 1999:
|
2000 |
1999 |
|
|
Net sales |
$1,180,178 |
$2,200,000 |
|
Receivables, less allowance for losses and discounts |
||
|
Beginning of year (allowance for losses and |
||
|
discounts, 2000—$12,300; 1999—$7,180) |
240,360 |
230,180 |
|
End of year (allowance for losses and |
||
|
discounts, 2000—$11,180; 1999—$12,300) |
220,385 |
240,360 |
Required a. Compute the number of days’ sales in receivables at December 31, 2000, and 1999.
b. Compute the accounts receivable turnover for 2000 and 1999. (Use year-end gross receivables.)
c. Comment on the liquidity of the Hawk Company receivables.