Accounts Receivable Turnover for Best Buy and Circuit City
The following information was summarized from a recent annual report of Best Buy Co. Inc.:
The following information was summarized from a recent annual report of Circuit City Stores, Inc. (Receivables are net of allowances.)
1. Calculate the accounts receivable turnover ratios for Best Buy and Circuit City for 2007.
2. Calculate the average collection period, in days, for both companies for 2007. Comment on the
reasonableness of the collection periods for these companies considering the nature of their
3. Which company appears to be performing better? What other information should you consider
in determining how these companies are performing?