Ratio Calculations: Accounts Receivable
Frosty King, Inc., reported the following information in its 2000 financial statements:
|
Years Ended November 30 |
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|
2000 |
1999 |
|
|
Net sales |
$228,542,157 |
$231,845,632 |
|
Accounts receivable, net |
21,402,613 |
19,280,407 |
|
Allowance for uncollectible accounts |
650,811 |
1,018,416 |
Required
a. Calculate the adequacy of Frosty King’s allowance account for each year.
b. Calculate its average sales per day for each year.
c. Calculate its collection period for each year.
d. Calculate its accounts receivable as a percentage of sales for each year.
e. Based on your analyses, discuss Frosty King’s management of accounts receivable.