Is the company collecting its accounts receivable more rapidly? Explain.


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Is the company collecting its accounts receivable more rapidly? Explain. 1 answer below » Assume that David and Tom Gardner of The Motley Fool have impressed you since you first heard of their rather improbable rise to prominence in financial circles. You learn of a staff opening at The Motley Fool and decide to apply for it. Your resume is successfully screened from the thousands received and you advance to the interview process. You learn that the interview consists of analyzing the following financial facts and answering analysis questions. (Note: The data are taken from a small merchandiser in outdoor recreational equipment.) View complete question » 2010 2009 2008 Assume that David and Tom Gardner of The Motley Fool have impressed you since you first heard of their rather improbable rise to prominence in financial circles. You learn of a staff opening at The Motley Fool and decide to apply for it. Your resume is successfully screened from the thousands received and you advance to the interview process. You learn that the interview consists of analyzing the following financial facts and answering analysis questions. (Note: The data are taken from a small merchandiser in outdoor recreational equipment.) 2010 2009 2008 Sales trend percents 137.00% 125.00% 100.00% Selling expenses to sales 9.80% 13.70% 15.30% Sales to plant assets ratio 3.5 to 1 3.3 to 1 3.0 to 1 Current ratio 2.6 to 1 2.4 to 1 2.1 to 1 Acid-test ratio 0.8 to 1 1.1 to 1 1.2 to 1 Merchandise inventory turnover 7.5 times 8.7 times 9.9 times Accounts receivable turnover 6.7 times 7.4 times 8.2 times Total asset turnover 2.6 times 2.6 times 3.0 times Return on total assets 8.80% 9.40% 11.10% Return on equity 9.75% 11.50% 12.25% Profit margin ratio 3.30% 3.50% 3.70% Required Use these data to answer each of the following questions with explanations. 1. Is it becoming easier for the company to meet its current liabilities on time and to take advantage of any available cash discounts? Explain. 2. Is the company collecting its accounts receivable more rapidly? Explain. 3. Is the company’s investment in accounts receivable decreasing? Explain. 4. Is the company’s investment in plant assets increasing? Explain. 5. Is the owner’s investment becoming more profitable? Explain. 6. Did the dollar amount of selling expenses decrease during the three-year period? Explain. View less » Jul 24 2014 07:49 AM

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