Computing Quality of Sales Ratios

Consider the following information for two hi tech companies:

Oxford, LTD

Kendall, LTD

(Dollars in thousands)

Accounts receivable

Beginning of year

$ 9,915

$ 408

End of year

11,250

7,258

Sales for year

21,891

11,606

Required

a. Calculate the cash collected from customers for each firm.

b. Compute the quality of sales ratio for each firm.

c. What do these ratios indicate?