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# Average collection period

The Robinson Company has the following current assets and
current liabilities for these two years:
2010 2011
Cash and marketable securities \$ 50,000 \$ 50,000
Accounts receivable 300,000 350,000
Inventories 350,000 500,000
Total current assets \$700,000 \$900,000
Accounts payable \$200,000 \$250,000
Bank loan 0 150,000
Accruals 150,000 200,000
Total current liabilities \$350,000 \$600The Robinson Company from Problem 2 had net sales of
\$1,200,000 in 2010 and \$1,300,000 in 2011.
a. Determine the receivables turnover in each year.
b. Calculate the average collection period for each year.
c. Based on the receivables turnover for 2010, estimate the
investment in receivables if net sales were \$1,300,000 in 2011.
d. How much of a change in the 2011 receivables occurred?,000

#### Solution Preview

The Robinson Company has the following current assets and
current liabilities for these two years:
2010 2011
Cash and marketable securities \$ 50,000 \$ 50,000
Accounts receivable 300,000 350,000 ...

#### Solution Summary

Solution helps in estimating average collection period

\$2.19