Description
Purpose of Assignment
The purpose of this assignment is to help you understand the basics of financial statement analysis using financial ratios on the assets section of the balance sheet, data interpretation, and how ratios are used to gain insight about the management of receivable.
Assignment Steps
Resources: Financial Accounting: Tools for Business Decision Making
Develop an 875-word analysis providing conclusions concerning the management of accounts receivable based on the financial statements of Columbia Sportswear Company presented in Appendix B and the financial statements of VF Corporation presented in Appendix C, including the following:
- Based on the information contained in these financial statement, compute the following 2014 values for each company:
- Accounts receivable turnover (For VF, use "Net sales" and assume all sales were credit sales)
- Average collection period for accounts receivable
- What conclusions concerning the management of accounts receivable can be drawn from this data?
Use the Week 1 Excel® spreadsheet to show your work and submit with your analysis.
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Explanation & Answer

Attached.
Running Head: MANAGEMENT OF ACCOUNTS RECEIVABLE
Management of Accounts Receivable
Institution Affiliation
Date:
1
MANAGEMENT OF ACCOUNTS RECEIVABLE
2
In essence, the receivable turnover ratio can be calculated to determine how effective a
company utilizes its assets in its operations. For instance, to establish whether companies such as
VP Corporation and the Colombia Sportswear Company utilizes their assets properly the
accounts receivable turnover ratio is calculated by using data from the financial statements.
Furthermore, calculating the receivable turnover ratio enables one to determine whether the
accounts are managed effectively. Thus, the receivable ratio is seen as an activity ratio that
measures the effectiveness of a company in managing the accounts receivables as well as
utilizing assets. This paper attempts to compare the receivable turnover ratio for two companies
namely, VP Corporation and Colombia Sportswear Company. It will evaluate the management of
accounts receivables in each company based on the calculated turnover ratio. Also, the paper will
determine the average collection period for accounts receivable in each company.
The receivable turnover ratio is calculated by taking the net value of credit sales in a
company within a given period and dividing it by the average accounts receivable in the s...
