Final answer:
The accounts receivable turnover ratio measures a company's effectiveness in collecting its receivables. Without specific financial data, we can't calculate the exact ratios for year 2 and 3, but an illustrative example was provided with hypothetical values.
Step-by-step explanation:
The accounts receivable turnover ratio is a financial measure used to evaluate how efficiently a company collects revenue from its credit customers and how often it turns its receivables into cash during a fiscal year. To compute it, we use the following formula: Accounts Receivable Turnover = Net Credit Sales / Average Accounts Receivable. For year 2 and year 3, we would need the net credit sales and beginning and ending accounts receivable for each year. Unfortunately, without the actual financial data for these years, we cannot compute the exact ratios.
However, to illustrate, let's assume Company XYZ has net credit sales of $100,000 for year 2, with beginning accounts receivable of $10,000 and ending accounts receivable of $15,000. The average accounts receivable is ($10,000 + $15,000) / 2 = $12,500. Thus, the accounts receivable turnover for year 2 would be $100,000 / $12,500 = 8. This means that Company XYZ collected its average receivables 8 times during the year.
For year 3, assuming net credit sales of $120,000 and accounts receivable of $12,000 at the start and $18,000 at the end of the year, the average accounts receivable would be ($12,000 + $18,000) / 2 = $15,000. The accounts receivable turnover for year 3 would then be $120,000 / $15,000 = 8 times.