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Simon Company’s year-end balance sheets follow.

At December 31	Current Yr					1 Yr Ago			2 Yrs Ago
Assets
Cash		$	36,427			$	42,580		$	43,476
Accounts receivable, net			89,700				62,200			50,200
Merchandise inventory			113,500				84,500			59,000
Prepaid expenses			11,731				11,177			4,831
Plant assets, net			359,936				326,521			277,293
Total assets		$	611,294			$	526,978		$	434,800
Liabilities and Equity
Accounts payable		$	153,734			$	89,950		$	57,968
Long-term notes payable secured by mortgages on plant assets			116,073				122,417			97,052
Common stock, $10 par value			162,500				162,500			162,500
Retained earnings			178,987				152,111			117,280
Total liabilities and equity		$	611,294			$	526,978		$	434,800

The company’s income statements for the Current Year and 1 Year Ago, follow. Assume that all sales are on credit:

For Year Ended December 31	Current Yr						1 Yr Ago
Sales				$	794,682					$	627,104
Cost of goods sold	$	484,756					$	407,618
Other operating expenses		246,351						158,657
Interest expense		13,510						14,423
Income tax expense		10,331						9,407
Total costs and expenses					754,948						590,105
Net income				$	39,734					$	36,999
Earnings per share				$	2.45					$	2.28

(1-a) Compute days' sales uncollected.
(1-b) For each ratio, determine if it improved or worsened in the current year.

Answer 1

1a. Days sales uncollected = (Average Accounts receivable / net annual credit sales) * 365

	$                                              75,950	$                         56,200
	Current Yr	1 Yr Ago
Average Accounts receivable	($89,700+62,200)/2 = $75,950	($62,200+50,200)/2
Net annual credit sales	$                                           794,682	$                       627,104
Days sales uncollected	34.884079	32.71068

1b. lower value indicates that the company is efficient in collecting the receivables. it means company is worsened in the current year.