1. eBook

   Accounts Receivable Analysis

   The following account balances are taken from the records of the Nearto Travel Agency:

   	December 31
   	2017	2016	2015
   Accounts receivable	$185,000	$100,000	$80,000
   Net credit sales	$600,000	$500,000

   Nearto extends credit terms requiring full payment in 60 days, with no discount for early payment.

   Required: (Assume 360 days in a year.)

   1. Nearto's accounts receivable turnover ratio for 2017 and 2016, respectively, are

   4.2 times5.4 times5.2 times6.4 times

   and

   4.4 times5.6 times5.4 times6.6 times

   .2. Its number of days' sales in receivables for 2017 and 2016, respectively, are

   71 days41 days56 days86 days

   and

   64 days34 days49 days79 days

   .3. The average age of its receivables for 2017 is

   lowerhigher

   than the credit period. The company may decide that allowing a

   shorterlonger

   payment term

   increasesdecreases

   sales which seems to be the case here. However, the company may find that allowing

   moreless

   time to pay could cause

   profitabilitycash flowliability

   problems.
2. 3