You are evaluating companies in the office supply industry and have compiled the following information:

	20X1		20X2
Company	Credit Sales ($)	Average Receivables Balance ($)	Credit Sales ($)	Average Receivables Balance ($)
A	5.0 million	1.0 million	6.0 million	1.2 million
B	3.0 million	1.2 million	4.0 million	1.5 million
C	2.5 million	0.8 million	3.0 million	1.0 million
D	0.5 million	0.1 million	0.6 million	0.2 million
Industry	25.0 million	5.0 million	28.0 million	5.4 million

a. Which company had the highest number of days of receivables for the year 20X1?

Answer:

Explain:

b. Which company has the lowest accounts receivable turnover in the year 20X2?

Answer:

Explain:

c. Which company reduced the average time it took to collect on accounts receivable from 20X1 to 20X2?

Answer:

Explain:

d. From 20X1 to 20X2, the industry average receivables collection period

1. Increased.

2. decreased.

3. did not change.

Answer:

Explain:

e. You determined that Company A had an operating cycle of 100 days in 20X2, whereas Company D had an operating cycle of 145 days for the same fiscal year. Which one of the following is true based on this information?

1. Company Ds inventory turnover is less than that of Company A.

2. Company Ds inventory turnover is greater than that of Company A.

3. Company Ds cash conversion cycle is shorter than that of Company A.

Answer:

Explain: