Accounting 26th Edition by Carl Warren ,Jim Reeve ,Jonathan Duchac

Exercise 4

Accounts receivable turnover and days' sales in receivables
The Limited Brands Inc. sells women's clothing and personal health care products through specialty retail stores including Victoria's Secret and Bath Body Works stores. The Limited Brands reported the following (in millions) for two recent years:

Assume that accounts receivable (in millions) were $249 at the beginning of Year 1.
a. Compute the accounts receivable turnover for Year 2 and Year 1. Round to one decimal place.
b. Compute the day's sales in receivables for Year 2 and Year 1. Use 365 days and round to one decimal place.
c. What conclusions can be drawn from these analyses regarding The Limited Brands' efficiency in collecting receivables