EX 8-27 Accounts receivable turnover and days’ sales in receivables
H.J. Heinz Company was founded in 1869 at Sharpsburg, Pennsylvania, by Henry J. Heinz. The company manufactures and markets food products throughout the world, including ketchup, condiments and sauces, frozen food, pet food, soups, and tuna. For two recent years, H.J. Heinz reported the following (in thousands):
| Year 2 | Year 1 | |
| Net sales | $10,706,588 | $10,494,983 |
| Accounts receivable | 1,265,032 | 1,045,338 |
Assume that the accounts receivable (in thousands) were $1,171,797 at the beginning of Year 1.
a. Compute the accounts receivable turnover for Year 2 and Year 1. Round to one decimal place.
b. Compute the days’ sales in receivables at the end of Year 2 and Year 1. Round to one decimal place.
c. What conclusions can be drawn from these analyses regarding Heinz’s efficiency in collecting receivables?
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