Question 1 1. Ahmed Company would like to compare its days' sales in receivables with that of a competitor, Khalid Company. Both companies have had similar sales results in the past, but Khalid Company has had better profit results. Ahmed Company suspects that one reason for the better profit results is that Khalid Company did a better job of managing receivables. Ahmed Company uses a calendar year that ends on December 31, while Khalid Company uses a fiscal year that ends on July 31. Information related to sales and receivables of the two companies follows: For Year Ended December 31, 20XX Ahmed Company. Net sales $ 3,780,000 Receivables, less allowance for doubtful accounts of $16,000 253,000 For Year Ended July 31, 20XX Khalid Company. Net sales Receivables, less allowance for doubtful accounts of $8,000 $ 3,885,000 138,000 Required a. Compute the days' sales in receivables for both companies. (Use year-end gross receivables.) [2 marks] Company Ahmed Khalid b. Which company manages their receivables better? Explain. [1 mark] 5 Days' Sales in Receivables Ratio