Hawk Company wants to determine the liquidity of its receivables. It has supplied you with the following data regarding selected accounts for December 31, 2009, and 2008:
|
|
2009 |
2008 |
|
Net sales |
$1,180,178 |
$2,200,000 |
|
Receivables, less allowance for losses and discounts |
|
|
|
Beginning of year (allowance for losses and discounts, 2009—$12,300; 2008—$7,180) |
240,360 |
230,180 |
|
End of year (allowance for losses and discounts, 2009—$11,180; 2008—$12,300) |
220,385 |
240,360 |
Required
a. Compute the number of days’ sales in receivables at December 31, 2009, and 2008.
b. Compute the accounts receivable turnover for 2009 and 2008. (Use year end gross receivables.
c. Comment on the liquidity of Hawk Company receivables.