Accounts Receivable Turnover Rosco Co. sells clothing, accessories, and personal care products for men and women through its retail stores. Rosco reported the following data for two recent years: Sales Year 1 Year 2 $5,124,600 $5,058,900 Accounts receivable 664,300 649,700 Assume that the accounts receivable were $554,800 at the beginning of Year 1 Classic Company manufactures and markets food products throughout the world. The following sales and receivable data were reported by Classic for two recent years: Year 2 Year 1 $1,525,700 $1,576,800 Sales Accounts receivable 197,100 204,400 Assume that accounts receivable were $233,600 at the beginning of Year 1. Accounts receivable turnover ratios Rosco Co. Classic Company Year 2 7.8 7.6 Year 1 8.4 7.2 a. Compute the average accounts receivable turnover ratio for Classic Company and Rosco Co. for Year 2 and Year 1. Round final answers to two decimal places. Rosco Co.: Classic Company: b. Does Classic Company or Rosco Co. have the higher average accounts receivable turnover ratio? has the higher average accounts receivable turnover ratio. c. Explain why the average turnover ratios are different in (b). Rosco operates a specialty retail chain of stores that sells directly to individual consumers. Many of these consumers (retail customers) pay using MasterCard or Visa, which is recorded as a cash sales. In contrast, Classic Company manufactures foods that are sold to food wholesalers, grocery store chains, and other food distributors that eventually sell Classic's products to individual consumers. Accordingly, because of the extended distribution chain, we would expect Classic to have accounts receivable than Rosco. In addition, we would expect Classic's period to pay their receivables. Thus, we would expect Classic's business customers to take a average accounts receivable turnover ratio to be than Rosco