The following information is available from the annual reports of Nite and Day Companies.

(In millions)

Nite Day

Sales revenue $112,500 $32,000

Beginning accounts receivable, net 19,000 3,500

Ending accounts receivable, net 18,500 4,400

Instructions

(a) Based on the preceding information, compute the following for each company:

1. Accounts receivable turnover. (Assume all sales were credit sales.)

2. Average collection period.

(b) What conclusion concerning the management of accounts receivable can be drawn from these data?