Acc/291 Week 1

The Receivable Turnover Ratio measures how many times a business can turn its accounts receivable into cash during a period. In other words, the accounts receivable turnover ratio measures how many times a business can collect its average accounts receivable during the year.

Account receivable is lower, could the company has higher require to provide the account receivable.

COMPONENT PERCENTAGES INCOME STATEMENT (each item is expressed as a percentage of net sales revenue)

o In summary this analysis shows the percent of every dollar in sales that is

Rapid cash collections are indicative of high turnover; however, loss of customers to rival firms and tight credit levels arise from extremely high accounts receivable turnover level, (Horngren, 2013, p. 805).The accounts receivable turnover for Harry Jones in 2014 was 7.93 times. This figure decreased to 5.63 times in 2015. Both figures are less than the industry average of 9 times. Low inventory turnover levels might be attributed to reduced accounts receivable turnover levels throughout both 2014 and 2015. Inventory levels can be increased in the future to achieve higher accounts receivable turnover, (Horngren, 2013, p. 805).

Cost of Sales and Net Sales are another important component of an income statement for assessing a company’s financial health. As mentioned in Macy’s 10K form, the cost of the sales and net sales in 2015 were $16,496 millions and $27,079 millions respectively. Whereas the cost of sales and net sales in 2016 were $15,621 millions and $25,778 millions respectively (p. 16). Therefore, the ratio of cost of sales to net sales in 2015 would be 0.609 or 60.9% ($16,496/$27,079 = 0.6091) and the ratio of cost of sales to net sales in 2016 would be 0.605 or 60.5% ($15,621/$25,778 = 0.605). The ratio of cost of sales to net sales is a part of ratio analysis, which is used to check the efficiency of the business (Kumar, 2012). It is also used to calculate the gross

The accounts receivable is on part of the revenue cycle within a healthcare organization. Accounts receivable is defined as the revenue that patients and third parties owe the organization for services that have been provided (Nowicki, 2015). Obtaining demographic information, insurance data, verifying insurance coverage, acquiring deductibles and copayments, receiving authorizations, recording charges, printing and submitting bills, following up with patients about payment, and collecting payment are some of the activities within the accounts receivable cycle (Nowicki, 2015). The revenue cycle utilizes a multidisciplinary system to decrease amounts within accounts receivable by managing the payment cycles (Nowicki, 2015). Some of the management

Reducing accounts receivables requires strategic financial planning. Finance managers and the department administrators role in this process is crucial. The finance manager would be assignment with generating reports; frequently, in efforts of reducing accounts receivable days, an aged trial balance statement is created. The aged trial balance report is a document that lists accounts in their respective order. The administrator would be able to create a plan that prioritizes accounts from oldest to newest; also, the administrator would formulate a system for medical billing staff to ensuring codes for services are correctly entered to avoid rejections and ensuring services are properly classified as charitable or uncollectible debts. The financial statements generated by the

Accounts receivable (A/R) relates to the revenue owed for services provided. This could include something simple as a regular health check-up or something more serious as a surgery. When a patient

Accounts receivable reflects a balance of how much money is owed to the clinic. A summary of accounts receivable can reflect any outstanding balances on a patient account and can be helpful information to the clinic, especially if a patient’s account is sent to a collection agency. Other money owed to the clinic in the form of rent, royalties, and interest should be tracked and documented in a separate area from accounts receivable. Accounts payable reflects the amount of money that is owed to others, such as overpayments due to patients and vendor invoices or statements. Business invoices or statements should be placed in a specific spot according to office protocol until each bill is paid and documented accordingly.

Accounts receivables are the financial aspect of a physician's office. According to the article, 8 Key Areas of Medical Accounts Receivable Management, accounts receivables are "revenues generated but not yet collected. The article further states that account receivables are also known as patient accounts. These must be looked at and worked on everyday. As a general rule, an office would like to keep their receivables under ninety days.

The process of recording and posting the effects of business transaction is done in a double entry t-form. The total dollar amount of debits must equal the total dollar amount of credits, with debits to the left and account credit to the right. Broken down, Assets = Liabilities + Stakeholder Equity. “Since debits increase assets, expense, and dividend accounts, they normally have debit balances. Conversely, because credits increase liability, capital stock, retained earnings, and revenue accounts, they normally have credit balances.”( Edwards, J. D., Hermanson, R.H., & Maher, M. W. (2011). p.84)

Receivables Turnover: This shows the degree of realization in accounts receivables. Company N has a lower turnover rate, a lower rate implies that receivables are being held longer and the less likely they are to be collected. Also there is an opportunity cost of tying up funds in receivables for a long period of time. Company M is 29 times higher than company N.

Nonetheless, an improvement in age of receivables for a single company over multiple periods suggests a company is becoming more efficient or effective at managing its receivables (Bujaki & Durocher, 2012; Gibson, 2011).

Accounts receivable turnover measures the average time it takes for a firm to collect on credit sales. Harley Davidson's accounts receivable turnover rate is 6.75 times for 2001 and 8.74 times for 2000. This accounts receivable turnover rate seems low and would indicate that Harley Davidson is able to turn their receivables into cash quickly.