Accounts Receivable Analysis Xavier Stores Company and Lestrade Stores Inc. are large retail department stores....
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Accounting
Accounts Receivable Analysis
Xavier Stores Company and Lestrade Stores Inc. are large retail department stores. Both companies offer credit to their customers through their own credit card operations. Information from the financial statements for both companies for two recent years is as follows (in millions):
Xavier
Lestrade
Sales
$8,500,000
$4,585,000
Credit card receivables-beginning
820,000
600,000
Credit card receviables-ending
880,000
710,000
a. Determine the (1) accounts receivable turnover and (2) the number of days' sales in receivables for both companies. Round your calculations and answers to one decimal place. Assume 365 days a year.
Xavier
Lestrade
1. Accounts receivable turnover
fill in the blank 1
fill in the blank 2
2. Number of days' sales in receivables
fill in the blank 3
days
fill in the blank 4
days
b. Xavier's accounts receivable turnover is much
higherlower
than Lestrade's. The number of days' sales in receivables is
higherlower
for Xavier than for Lestrade. These differences indicate that Xavier is able to turn over its receivables
lessmore
quickly than Lestrade. As a result, it takes Xavier
lessmore
time to collect its receivables.
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