The receivables turnover ratio and b the average collection

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Reference no: EM13586604

The following data are taken from the financial statements of Tall Tail Company.

2007 2006

Accounts receivable (net), end of year $ 560,000 $ 540,000.Net sales on account 4,700,000 4,000,000

Terms for all sales are 1/10, n/45.At the end of 2005, accounts receivable was $500,000.

Instructions

Compute for each year

(a) the receivables turnover ratio and (b) the average collection period.What conclusions about the management of accounts receivable can be drawn from these data?

Reference no: EM13586604

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