Question

For two recent years, Robinhood Company reported the following: 2019 2018 Sales $8,107,000 $6,785,000 Accounts receivable: Beginning of year 610,000 540,000 End of year 600,000 610,000

Determine the accounts receivable turnover for 20Y9 and 20Y8.

Answer 1

The accounts receivable turnover for Robinhood Company was approximately 13.40 times in 20Y9 and 11.80 times in 20Y8, indicating an increase in efficiency in collecting receivables.

Step-by-step explanation:

The question requires calculating the accounts receivable turnover for Robinhood Company for the years 20Y9 (2019) and 20Y8 (2018). The accounts receivable turnover ratio is an efficiency ratio that measures how many times a company can turn its accounts receivable into cash during a period. To calculate this, we use the formula: Accounts Receivable Turnover = Net Credit Sales / Average Accounts Receivable.

For 20Y9, the accounts receivable turnover ratio would be calculated as follows:

Sales (considered all on credit): $8,107,000
Average Accounts Receivable: ($610,000 + $600,000) / 2 = $605,000
Accounts Receivable Turnover: $8,107,000 / $605,000 ≈ 13.40 times

For 20Y8, the calculation is:

Sales (considered all on credit): $6,785,000
Average Accounts Receivable: ($540,000 + $610,000) / 2 = $575,000
Accounts Receivable Turnover: $6,785,000 / $575,000 ≈ 11.80 times

Therefore, the accounts receivable turnover ratio increased from 20Y8 to 20Y9, indicating that Robinhood Company might have become more efficient in collecting its receivables.