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The following information is available from the annual reports of Nite and Day Companies.
(In millions)
Nite Day
Sales revenue $112,500 $32,000
Beginning accounts receivable, net 19,000 3,500
Ending accounts receivable, net 18,500 4,400
Instructions
(a) Based on the preceding information, compute the following for each company:
1. Accounts receivable turnover. (Assume all sales were credit sales.)
2. Average collection period.
(b) What conclusion concerning the management of accounts receivable can be drawn from these data?
Answer & Explanation
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