Evaluating Accounts Receivable Performance Companies offer trade credit to make it easier for customers to do business with them but how can a company check whether receivables are being paid in a timely fashion? Imagine that a company has terms of "Net 30 " - we would expect most receivables to be paid close to 30 days. How can we check? And can we tell if it's getting worse? Required Compute the 'days sales in receivables' for 2021 using the formula below, then click on the tab at bottom to go to part 2 of the worksheet and do the same for 2020 . The computation for "Days Sales in AR" for 2020 is the "part 2" tab at bottom. The following data is taken from the records of Mom \& Pop Inc. Formula Days Sales in Receivables = Average Accounts Receivable Average Daily Sales Step 1 Calculate "average Accts Receivable" for 2021 add the ending AR for 2021 plus the ending AR of 2020 , then divide by 2 Step 2 Calculate "average Daily Sales" for 2021 take the total sales for 2021, divide by 365 days to get a "daily average" \begin{tabular}{|l|l|} \hline Net Sales 2021 & Avg Dly Sales \\ \hline & divide by 365 \\ \hline \end{tabular} Step 3 Divide Average AR (from step 1) by Avg Daily Sales (from step 2) to get "Days Sales in AR" Step 4 Use the tab at bottom to go to "Week 13 Lab part 2" \& calculate the formula for 2020 . Which is better