A financial analyst is comparing the credit management of two companies, Zealand Inc. (Zealand) and Manotick Ltd.

(Manotick). The two companies are in the same industry, but operate in different parts of the country. They don’t compete because their services can only be provided in their local markets. Through conversations with representatives of each of the companies the analyst learned that Zealand gives its customers 45 days to pay invoices while Manotick gives 60 days. The analyst obtained the following information about each company:

Required

a. Calculate the accounts receivable turnover ratio for Zealand and Manotick for 2012-2015.

b. Calculate the average collection period of accounts receivable for Zealand and Manotick for 2012-2015.

c. Which company is doing a better job managing its receivables? Explain.

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Zealand Inc. Revenue 2015 2014 2013 2012 2011 $1,405,560 $1,326,000 $1,300,000 $1,250,000 % Credit sales 85.0% 82.0% 83.0% 80.0% Accounts receivable at year-end $184,100 $162,410 $153,250 $139,165 $125,000 Manotick Ltd. 2015 2014 2013 2012 2011 Revenue $1,518,967 $1,446,635 $1,404,500 $1,325,000 % Credit sales 70.0% 71.0% 68.0% 72.0% Accounts receivable at year-end $212,120 211,910 $195,188 $208,200 $196,000