Accounts Receivable Analysis
The following account balances are taken from the records of the Faraway Travel Agency:
December 31
|
2014
|
2013
|
2012
|
|
Accounts receivable
|
$150,000
|
$100,000
|
$80,000
|
|
|
2014
|
2013
|
|
Net credit sales $600,000 $540,000
Faraway extends credit terms requiring full payment in 60 days, with no discount for early payment.
Required
1. Compute Faraway's accounts receivable turnover ratio for 2014 and 2013.
2. Compute the number of days' sales in receivables for 2014 and 2013. Assume 360 days in a year.
3. Comment on the efficiency of Faraway's collection efforts over the two-year period.