Accounts Receivable Analysis The following account balances are taken from the records of the Faraway Travel Agency:

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 2008 and 2007.
2. Compute the number of days’ sales in receivables for 2008 and 2007. Assume 360 days in a year.
3. Comment on the efficiency of Faraway’s collection efforts over the two-year period.

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December 31 2008 2007 2006 Accounts receivable $150,000 $100,000 $80,000 2008 2007 Net credit sales $600,000 $540,000