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Comment on liquidity of hawk company receivables

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Reference no: EM132955104

Question - Hawk Company wants to determine the liquidity of its receivables. It has supplied you with the following data regarding selected accounts for December 31, 2011, and 2010:

2011 2010

Net sales $1,180,178 $2,200,000

Receivables, less allowance for losses and discounts Beginning of year (allowance for losses and discounts, 2011-$12,300; 2010-$7,180) $240,360 $230,180

End of year (allowance for losses and discounts, 2011-$11,180; 2010-$12,300) $220,385 $240,360

Required -

a. Compute the number of days' sales in receivables at December 31, 2011, and 2010.

b. Compute the accounts receivable turnover for 2011 and 2010. (Use year-end gross receivables).

c. Comment on liquidity of Hawk Company receivables.

Reference no: EM132955104

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