The information on the next page has been extracted from the financial statements of Crystal Craft Ltd.

Question:

2015

2016

2017

Cash at bank

Marketable securities

Accounts receivable

Sales revenue (all sales on credit)

Cost of sales

$ 44 000

88 000

102 000

1 108 000

672 000

$ 40 000

100 000

108 000

1 120 000

680 000

$ 36 000

96 000

124 000

1 130 000

700 000

Required

A. Calculate the following for years 2016 and 2017:

1. The receivables turnover ratio

2. Average collection period of accounts receivable.

B. Based on the ratios calculated in requirement A, comment on the credit collection policies of the company. What additional information would make an analysis of cash collection policies more meaningful?

Financial Statements
Financial statements are the standardized formats to present the financial information related to a business or an organization for its users. Financial statements contain the historical information as well as current period’s financial...

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