205.Accounts receivable turnover rateDuring 2015, Larsen Company's accounts receivable averaged $750,000. Larsen's 2015 income statement reported net sales of $6,780,000, uncollectible accounts...

205.Accounts receivable turnover rate


During 2015, Larsen Company's accounts receivable averaged $750,000. Larsen's 2015 income statement reported net sales of $6,780,000, uncollectible accounts expense of $160,000, and net income of $768,000. (Assume 365 days in a year.)


Using the information, compute the following for Larsen Company:


(a) Accounts receivable turnover: (Round to the nearest two decimals.)
(b) Average number of days to collect accounts receivable
(Round to nearest day, if necessary): (Round to the nearest %.)

206.Evaluating the quality of receivables


(a.) The 2015 annual report of Modern Books, a publicly traded corporation, reports accounts receivable (net of allowance for doubtful accounts), of $190,714 as of February 28, 2015. What assurance do readers of Modern Books ' annual report have that these receivables really exist and are not fictitious assets recorded to make the balance sheet "look good"?
(b.) The accounts receivable turnover rate is frequently used in evaluating the liquidity of accounts receivable. How is the accounts receivable turnover rate computed? What type of information does the accounts receivable turnover rate provide?