Concept explainers
a)
Accounts Receivable Turnover Ratio: This ratio is mainly used to evaluate the collection process efficiency. It helps the company to know the number of times the accounts receivable is collected in a particular time period. Main purpose of accounts receivable turnover ratio is to manage the
Formula:
To compute: Accounts receivable turnover ratio for the year 2019.
b)
Average collection period: This ratio is used to measure the number of days a particular company takes to collect their accounts receivables.
Formula:
To compute: Average collection period for 2019 and 2018.
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Financial Accounting
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