Accounts Receivable Turnover and Days' Sales in Receivables

Classic Company designs, markets, and distributes a variety of apparel, home decor, accessory, and fragrance products. The companys products include such brands as Polo by Classic, Classic Purple Label, Classic, Polo Jeans Co., and Chaps. Polo Classic reported the following for two recent years:

	For the Period Ending
	Year 2		Year 1
Sales	$4,137,640		$4,100,775
Accounts receivable	390,550		405,150

Assume that accounts receivable were $361,350 at the beginning of Year 1.

a. Compute the accounts receivable turnover for Year 2 and Year 1. Round your answers to two decimal places.

Year 2:	fill in the blank 1
Year 1:	fill in the blank 2

b. Compute the days' sales in receivables for Year 2 and Year 1. Round your final answers to one decimal place. Use 365 days per year in your calculations.

Year 2:	fill in the blank 3 days
Year 1:	fill in the blank 4 days

c. The change in the accounts receivable turnover from year 1 to year 2 indicates a(n)

increasedecrease

in the efficiency of collecting accounts receivable and is a(n)

favorableunfavorable

change. The change in the days' sales in receivables is a(n)

favorableunfavorable

change.