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Answer :
Final answer:
The accounts receivable turnover for Morgan is approximately 4.10 and for Stanley is 4.72. Stanley has a higher accounts receivable turnover, suggesting it is managing its receivables more efficiently than Morgan. Therefore, the answer is C) Morgan: 4.08, Stanley: 4.72; Stanley.
Explanation:
The accounts receivable turnover is a financial ratio that measures how efficiently a company uses its accounts receivable to generate sales, and it is calculated by dividing net sales by average accounts receivable. To calculate Morgan's turnover, we divide $310,000 by $75,600, resulting in approximately 4.10. Similarly, Stanley's turnover is calculated as $290,000 divided by $61,350, which is approximately 4.72.
By comparing the turnover rates, we can determine which company is managing its accounts receivable more effectively. A higher turnover indicates that the company is collecting on receivables more frequently throughout the year. In this case, Stanley has a higher turnover rate at 4.72 compared to Morgan at 4.10, suggesting that Stanley is doing a better job managing its accounts receivable. Although when calculated with the provided numbers, Morgan's turnover appears to be 4.10, we're instructed to ignore any typos, so we must presume that option C's turnover figure for Morgan is the intended figure.
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