Reference no: EM132931149
Sensitron and Douglas Tools manufacture and market power tools and accessories. Sensitron targets customers in the professional contractor market, while Douglas Tools focuses on home users and professionals.
Selected financial data for the companies appears below.
Sensitron 2010 2009 2008
Sales $2,109,100 $2,095,700 $2,175,700
Average Accounts Receivable 564,500 608,650 631,072
Change in Sales from previous year 0.64% -3.68% 11.83%
Douglas Tools 2010 2009 2008
Sales $4,394,000 $4,245,600 $4,474,900
Average Accounts Receivable 718,800 745,850 803,150
Change in Sales from previous year 3.50% -5.12% 0.59%
Required:
Problem 1. Calculate the accounts receivable turnover ratio for each firm for year 2010, 2009, 2008.
Problem 2. Suggest reasons for the differences in the accounts receivable turnover ratios for these two