Accounts Receivable Analysis Xavier Stores Company and Lestrade Stores Inc. are large retail department stores. Both companies offer credit to their customers through their own credit card operations. Information from the financial statements for both companies for two recent years is as follows (in millions): Sales Credit card receivables-beginning Credit card receivables-ending Xavier $288,350 63,549 53,055 Lestrade $405,150 79,648 61,322 a. Determine the (1) accounts receivable turnover and (2) the number of days' sales in receivables for both companies. Round answers to one decimal place. Assume 365 days a year. 1. Accounts receivable turnover 2. Number of days' sales in receivables Xavier 4.9 74 X days Lestrade 5.7 64 X days b. Xavier's accounts receivable turnover is lower than Lestrade's. The number of days' sales in receivables is higher for Xavier than for Lestrade. These differences indicate that Xavier is able to turn over its receivables less quickly than Lestrade. As a result, it takes Xavier more time to collect its receivables. Feedback Check My Work a.1. Divide merchandise sales by average credit card receivables. Average credit card receivables = (Beginning Receivables + Ending Receivables) +2. a.2. Divide average credit card receivables by average daily merchandise sales. Average credit card receivables = (Beginning Receivables + Ending Receivables) +2. Average daily merchandise sales = Merchandise Sales + 365 days. b. Consider the relationship of the accounts involved. Learning Objective 3.