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Accounts Receivable Turnover computations

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The following data are taken from the comparative balance sheets of Fulton Company.
Compute and interpret its accounts receivable turnover for year 2005 (competitors average a turnover of 7.5).
2005 2004

Accounts receivable $152,900 $133,700
Net Sales 754,200 800,600.

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Solution Summary

The solution provides the computation of the turnover rate for accounts receivable in a comparative situation. Also presented is a list of four reasons to calculate the change in the turnover followed by a suggestion about which reasons should be investigated for this company.

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The accounts receivable turnover ratio is a measure of the number of times, on average, receivables are collected during the accounting period (one year, in this ...

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