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):

	Xavier		Lestrade
Sales	$8,500,000		$4,585,000
Credit card receivablesbeginning	820,000		600,000
Credit card receviablesending	880,000		710,000

a. Determine the (1) accounts receivable turnover and (2) the number of days' sales in receivables for both companies. Round your calculations and answers to one decimal place. Assume 365 days a year.

	Xavier		Lestrade
1. Accounts receivable turnover
2. Number of days' sales in receivables		days		days

b. Xavier's accounts receivable turnover is much higher than Lestrade's. The number of days' sales in receivables is lower for Xavier than for Lestrade. These differences indicate that Xavier is able to turn over its receivables more quickly than Lestrade. As a result, it takes Xavier less time to collect its receivables.