EX 9-28 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):
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For the Period Ending |
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Jan. 31, 2010 |
Jan. 31, 2009 |
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Net sales |
$8,632 |
$9,043 |
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Accounts receivable |
249 |
313 |
Assume that accounts receivable (in millions) were $355 at the beginning of fiscal year 2009.
a. Compute the accounts receivable turnover for 2010 and 2009. Round to one decimal place.
b. Compute the day’s sales in receivables for 2010 and 2009. Round to one decimal place.
c. What conclusions can be drawn from these analyses regarding The Limited Brands’ efficiency in collecting receivables?