[maandpa1227]

Assume that Hickory Company has the following data related to its accounts receivable:
2005 2006
Net sales $1,425,000 $1,650,000
Net receivables:
Beginning of year $375,000 $333,500
End of year $420,000 $375,000

Use these data to compute accounts receivable turnover ratios and average collection periods for 2005 and 2006. Based on your analysis, is Hickory Company managing its receivables better or worse in 2006 than it did in 2005?

formula is total revenue / average assets for period

375,000 / 420,000 = 1.12 (2005)

333,500 / 375,000 = 1.125 (2006)

Better in 2006.

Please advise.